S&P 500 wraps worst first half since 1970

Consumer inflation rose 8.6% in May, a fresh 40-year high

Stocks wrapped up the worst first half in fifty years as the second quarter closed on Thursday with inflation at a 40-year high.

The S&P 500, the broadest measure of stocks, is down 20.6% this year the worst since 1970, as tracked by Dow Jones Market Data Group. That makes 2022 the fifth-worst half performance on record. 

Stocks are falling as the possibility of a recession rises. 

"I think there is a very real risk of a recession, it is perhaps inevitable we do have an economic downturn before 2024," said John Lonski, president of economic forecasting firm Thru the Cycle. 

Ticker Security Last Change Change %
SP500 S&P 500 5320.95 -0.46 -0.01%

S&P 500

The Federal Reserve, which hiked interest rates this month by 0.75 basis points, has failed to contain inflation thus far as critics, including former U.S. Treasury Secretary Larry Summers, continue to also predict a forthcoming recession. 

FED HIKES RATE BY MOST SINCE 1994 TO BATTLE INFLATION

The U.S. Central Bank is on pace to hike rates again in July by another 0.75 basis points, as tracked by the CME's Fed Watch Tool. 

Larry Summers, recession, fed

FILE - Former Treasury Secretary and White House Economic Advisor Larry Summers is interviewed by FOX News' Maria Bartiromo at FOX Studios on May 24, 2017, in New York City. (Robin Marchant/Getty Images / Getty Images)

Even so, San Francisco Federal Reserve President Mary Daly says a recession is "not the most likely outcome" telling FOX Business’ Ed Lawrence in an exclusive interview it may come in the form of an economic slowdown as inflation comes down. 

WHAT IS A RECESSION?

"I see us doing that with some slowing in GDP, some slowing in the labor market… It's going to be a welcome relief to people who have jobs and are watching their disposable income erode because of inflation" she said. 

The final read on 1Q GDP contracted 1.6% more than expected and on Friday the Federal Reserve's Bank of Atlanta, via its GDPNow, pegged 2Q GDP running -1%. Two-consecutive back-to-back quarters of negative growth cement a recession.  

Ticker Security Last Change Change %
I:COMP NASDAQ COMPOSITE INDEX 16838.988704 +6.36 +0.04%

Inflation and recession fears have been punishing technology stocks with the Nasdaq Composite’s 29.5% slide tracking as the worst first half ever. 

According to Jefferies, mutual fund managers of large-cap growth funds are underweight tech by 9.1%, the largest on record based on the firm's review of second quarter Securities and Exchange filings, as reported by Seeking Alpha. 

Nasdaq Composite

The Dow Jones Industrial Average is down the least, off 15.3%, the worst first half since 1962. 

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Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 39861.66 -11.33 -0.03%

DJIA

This story, originally published on 6/28/22 was updated with final prices on 6/30/2022.