On Monday, US stocks ended the day lower, as there were not many catalysts to change investor sentiment. The first half of the year is about to end during which equity markets have taken a beating because of worries about high inflation and the aggressive tightening policy of the US Federal Reserve.
Indexes lose ground
Earlier in the trading session, the US stock indexes had been oscillating, but they lost ground because of weakness in mega-caps that tend to be rate sensitive. These include Microsoft Corp, Amazon.com, and Alphabet Inc. which were dragging the session down.
Market analysts said that this week and the coming one are expected to not have any proper direction because investors are now keeping an eye out on what will happen during the second quarter. It should be noted that for the first time after 2015, all three US stock indexes may record declines in two quarters consecutively.
Moreover, the indexes are also on course to posting losses for this month. This means that the tech-heavy Nasdaq would be down for the third month straight, which is the longest losing streak the index has had since 2015. As for the S&P 500 index, it was on course for its fifth-worst decline to have happened since 1962.
Market analysts said that every time the S&P 500 index recorded gains of more than 20% in a year, it started the next year with losses of 11% early on. As for years in which it started with a decline, it would eventually come back to break even, but there was no way to guarantee the same would happen this year.
Economic data surprises
Energy stocks were in the lead, thanks to increases in oil prices, and the broader market was outperformed by transports, semiconductors, and economically sensitive small caps. Economic data came as a surprise because it turned out to be positive. Pending home sales and new orders for US-manufactured durable goods were better than expected.
This gave credence to the assertion of US Fed Chairman Jerome Powell that the economy is strong enough to toughen things out and deal with the hike in interest rates for stemming inflation without leading to a recession.
There was a 0.2% decline in the Dow Jones Industrial Average, as it lost 62.42 points to come down to 31,438.26. There was also a 0.3% drop in the S&P 500, as it climbed down by 11.63 points to reach 3,900.11. A 0.8% drop was also recorded in the Nasdaq Composite, as it came down by 93.05 points to reach 11,514.57.
Of the 11 sectors that make up the S&P 500 index, there were eight that were negative, with the largest percentage loss recorded in consumer discretionary stocks. The biggest winners were energy stocks, as they climbed up by 2.8% for the day. There was a 4% drop in Robinhood Markets in extended trading after Sam Bankman-Fried said that FTX was not in any active conversation about a merger with the stock trading platform.