U.S. stocks fell in choppy trading on Friday as stocks struggled to find direction after their worst start in decades.
The S&P 500 fell about 0.7% and shrugged off earlier gains. The Dow and Nasdaq also fluctuated between gains and losses, trading lower as of 10:53 a.m. ET.
The moves follow a mixed set of economic data on Friday morning that provided evidence of further weakness in some key sectors of the economy. The S&P Global final manufacturing Purchasing Managers’ Index (PMI) for June was revised up to 52.7, still the lowest level since July 2020 but better than the 52.4 reported earlier this month. However, the Institute for Supply Management’s manufacturing index fell below expectations to 53.0 in June from 56.1 in May, as the index tracking new orders contracted for the first time in two years, signaling further weakness in economic demand.
West Texas Intermediate crude futures recovered above $108 a barrel after recording their first monthly decline since November 2021 in June. The 10-year U.S. Treasury yield remained below 2.9%, down sharply from a more than 10-year high of nearly 3.5% reached in mid-June.
Markets are faltering into July and the second half of the year amid widespread concerns about the economy’s ability to remain resilient amid inflation and the Fed’s aggressive response to inflation. The S&P 500 ended Thursday with its worst first-half performance since 1970, down more than 20% so far in 2022. The Dow is down 15.3% so far this year, its worst first half performance since 1962, and the Nasdaq Composite’s 29.5% plunge was its worst first half on record.
The backdrop remains challenging, with economic data, company results and anecdotes pointing to growing signs of slowing U.S. growth. So far, Fed officials have telegraphed that they will allow the economy to continue softening to some extent if it means meeting their current main goal of lowering inflation.
the story continues
Semiconductor leader Micron Technology on Thursday provided a sales forecast for the current quarter that fell well short of Wall Street’s expectations, a sign that customers are reducing orders for memory chips widely used in computers and smartphones as they expect weaker demand from consumers. Just a day earlier, furniture company RH cut its own revenue forecast, citing a “deteriorating macro environment.”
Inflation, especially on necessities like gasoline and food, has been high, putting pressure on consumers’ willingness to spend. New data this week showed that real personal spending fell more than expected through May. But many strategists believe that the full impact of inflation on corporate profits may not have been fully reflected in earnings estimates so far, pointing to further volatility in stocks. The next quarterly reporting season will begin in mid-July.
“Everyone is thinking about inflation right now, whether it’s consumers, businesses or policymakers. But after that, that’s where the real gains come in,” Zephyr market strategist Ryan Nauman told Yahoo Finance Live on Thursday. Earnings estimates so far… haven’t declined at all.”
The next catalyst for the market “could be earnings, once we start getting some expected earnings downgrades,” he added. “Right now, the recession isn’t factoring into future earnings. I think that’s going to happen. Once we start to get into earnings season with more downgrades, we’ll probably see some pickup in volatility or more selling.”
on the move
Shares of Kohl’s (KSS) fell on Friday morning after the retailer said it would end discussions on a sale to Franchise Group, the parent company of The Vitamin Shoppe. “Given the environment and market volatility, the board believes it would be imprudent to continue to pursue a deal,” Kohl’s chairman Peter Bonepas said in a statement.
Micron Technology (MU) shares fell after major Wall Street firms slashed their price targets on the stock after releasing a current-quarter forecast well below consensus estimates. The company said it expects adjusted revenue to total between $6.8 billion and $7.6 billion, compared with analysts’ consensus estimate of $9.14 billion, according to Bloomberg data.
Shares of Walgreens Boots Alliance (WBA) edged higher Friday morning as the stock steadied after falling to its lowest intraday level since December 2020 a day earlier. Walgreens on Thursday reported better-than-expected quarterly results but highlighted a waning boost from a COVID-19 vaccine, and the company maintained its full-year outlook.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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