Stocks Fall, Extending A Deep Slump Into Second Half Of 2022

NEW YORK (AP) -- Stocks fell in morning trading on Wall Street Friday, continuing a dismal streak as markets worry about high inflation and the possibility that higher interest rates could bring on a recession.

The S&P 500 fell 0.4% as of 10:23 a.m. Eastern. The Dow Jones Industrial Average fell 160 points, or 0.5%, to 30,614 and the Nasdaq fell 0.2%.

The market is mired in a deep slump. The S&P 500 on Thursday closed out its worst quarter since the onset of the pandemic in early 2020 and its performance in the first half of 2022 was the worst since the first six months of 1970.

The benchmark index has been in a bear market since last month, meaning an extended decline of 20% or more from its most recent peak. It's now down 21% from the peak it set at the beginning of this year.

The latest slip precedes a long holiday weekend. Financial markets in the U.S. will be closed on Monday for Independence Day.

Bond yields fell significantly. The yield on the 10-year Treasury, which helps set mortgage rates, fell to 2.84% from 2.97% last Thursday. The yield on the 2-year Treasury slipped to 2.80% from 2.92%.

Wall Street remains concerned about the risk of a recession as economic growth slows and the Federal Reserve aggressively hikes interest rates. The Fed is raising rates to purposefully slow economic growth to help cool inflation, but could potentially go too far and bring on a recession.

Economic data over the last few weeks has shown that inflation remains hot and the economy is slowing. The latter has raised hopes on Wall Street that the Fed will eventually ease off its aggressive push to raise rates, which have been weighing on stocks, especially pricier sectors like technology. Analysts don't expect much of a rally for stocks until there are solid signs that inflation is cooling.

The latest economic update on Friday for the manufacturing sector shows a continued slowdown in growth in June that was sharper than economists expected. On Thursday, a report showed that a measure of inflation that is closely tracked by the Fed rose 6.3% in May from a year earlier, unchanged from its level in April.

Earlier this week, a worrisome report showed that consumer confidence slipped to its lowest level in 16 months. The government has also reported that the U.S. economy shrank at an annual rate of 1.6% in the first quarter and weak consumer spending was a key part of that contraction.

Energy and technology stocks were among the big losers on Friday. Hess fell 2.4% and chipmaker Micron shed 5.6% after giving investors a disappointing profit forecast.

Retailers and other companies that rely directly on consumer spending made solid gains. Amazon rose 1.3% and Starbucks rose 2.7%.