Wall Street started second half of 2022 with a positive note after completing a highly disappointing first half. Market participants sidetracked the fear of economic slowdown and a possible recession as valuation of stocks are too cheap currently. All three major stock indexes ended in green. However, for the week as a whole, these indexes posted losses, for the fourth time in last five weeks. U.S. stock markets will remain close on Monday for Independence Day holiday.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 1.1% or 321.83 points to close at 31,097.26. Notably, 24 components of the 30-stock index ended in positive territory while 6 in red. The blue-chip index is currently down 14.4% year to date. .
The tech-heavy Nasdaq Composite finished at 11,127.85, rising 0.7% due to strong performance of large-cap technology stocks. The tech-laden index is in bear market since Mar 7 and is down 28.9% year to date.
The S&P 500 gained 1.1% to end at 3,825.33. The broad-market index entered a bear market territory on Jun 13 and is down 19.7% year to date. All 11 broad sectors of the benchmark index closed in positive zone.
The Utilities Select Sector SPDR (XLU), the Consumer Discretionary Select Sector SPDR (XLY), the Energy Select Sector SPDR (XLE) and the Real estate Select Sector SPDR (XLRE) surged 2.5%, 1.8%, 1.5% and 1.8%, respectively.
The major gainer of the index was Etsy Inc.
ETSY
, shares of which surged 9%. Etsy carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
The fear-gauge CBOE Volatility Index (VIX) was down 7% to 26.70. A total of 11.01 billion shares were traded Friday, lower than the last 20-session average of 12.88 billion. Advancers outnumbered decliners on the NYSE by a 2.77-to-1 ratio. On Nasdaq, a 1.57-to-1 ratio favored advancing issues.
Stocks Rise Despite Recession Fear
A large section of economists and financial experts have warned that the U.S. economy may fall into recession in late 2022 or early 2023. In the first half of 2022, the Fed hiked the benchmark interest rate to 1.50-1.75% from 0-0.25% in March 2020. Another 75-basis-point hike is almost certain in July.
However, recently, several major investment bankers and portfolio managers have said that the U.S. economy may not fall into a recession anytime soon despite slowing GDP growth. Even if there is a recession, the effect may be mild. The U.S. economy is cooling as desired by the Fed.
The broad-market benchmark — the S&P 500 Index — has tumbled 20.6% in first-half 2022, marking its worst first half since 1970. The blue-chip Dow has plummeted 15.3% in the same period, reflecting its worst first half since 1962 and its worst monthly performance in June since March 2020.
The tech-heavy Nasdaq Composite has plunged 29.5% to record the worst-ever first half for the index. The index also recorded its worst quarterly performance in second-quarter 2022 since 2008.
Economic Data
The Institute of Supply Management reported that the manufacturing index in June dropped to 53% from 56.1% in May, marking its lowest reading since June 2020. The consensus estimate was 54.4%. New orders index came in at 49.2% in June compared with 55.1% in May, contracting first time since May 2020.
Construction spending dropped 0.1% in May compared with the consensus estimate of an increase of 0.4%. April’s data was revised upward to an increase 0f 0.8% from 0.2% reported earlier.
Weekly Roundup
Last Week was a disappointing one for Wall Street. The Dow, the S&P 500 and
the Nasdaq Composite declined 1.3%, 2.25 and 4.1%, respectively. Market participants were highly concerned regarding high inflation, slowing economic growth and a possible recession in the near-term.
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