US Stock Markets Ended June 17, 2022
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The S&P 500 Index shed more than 5% for the second straight week as equities entered their first bear market since the Covid-19 pandemic. Monday began on a sour note as all 500 S&P members were in the red at one point during the day. On Wednesday the Fed announced a well anticipated 75 basis point increase in the federal funds rate. While it was largely expected based on comments from FOMC board members leading up to the meeting, the market still struggled to digest the news of the largest rate hike since 1994 with indications that more raises of the same size may be on the horizon. Many market strategists believe that the S&P 500 has very nearly priced in a recession as the forward price to earnings multiple on the index has contracted by nearly a third to 15.5x. Unlike other recessionary environments, the labor market continues to be strong as shown by the low Initial Jobless Claims figure of 229,000 released on Thursday. Energy was the worst performing GICS sector due to news that Russia is continuing to wage its commodity war and halted supply of natural gas to Europe. President Biden wrote an open letter to major US oil refiners asking them to increase production to alleviate supply shortages. He reasoned that energy companies have profited substantially from the current supply squeeze and ought to invest more in production capacity that has been woefully underfunded mostly due to the long payback periods and the increasing green energy narrative in Washington. While the twelve worst performing stocks in the S&P 500 all came from the energy sector, the best performing stock during the week was Fedex Corp (FDX, 11.2%) as the shipping company raised its dividend in a sign of balance sheet strength before it releases earnings next week. Other companies releasing earnings announcements in the coming week include Carnival Corp, Darden Restaurants, Inc., and Accenture PLC.
Posted on Tuesday, June 21, 2022 @ 8:36 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.