US stock futures tumbled Thursday morning, with the major averages on track to post steep declines for the month of June and first half of 2022 as concerns over heightened inflation and the prospects of a recession weighed on risk assets.
Contracts on the S&P 500 shed about 1.4% as of 7:45 a.m. in New York, and the index paced for a third straight day of losses. Dow futures dropped more than 350 points, or 1.2%, and Nasdaq futures declined by about 1.6%.
The risk-off mood extended to other asset classes including oil. West Texas intermediate crude futures fell back below $110 per barrel, and bitcoin prices sank to just over $19,000.
Thursday’s early price action extended a streak of declines for US equities. These have been hit hard for months now as investors have weighed persistently hot inflation against risks of an economic downturn, as the Federal Reserve responds to inflation with faster tightening. Federal Reserve Chair Jerome Powell this week reaffirmed that the central bank’s main goal is bringing down inflation running at its fastest rate in over 40 years, suggesting that this aim will take priority over fully preserving activity elsewhere in the economy.
“Is there a risk we would go too far? Certainly there’s a risk,” Powell said at the European Central Bank’s annual economic policy roundtable conference in Portugal on Wednesday. “The bigger mistake to make — let’s put it that way — would be to fail to restore price stability.”
Powell earlier in June suggested either a 50 or 75 basis point interest rate hike would most likely be on the table following the Fed’s July meeting. And in the weeks since, a number of other key central bank officials have affirmed that the latter will probably be the most appropriate option, with inflation showing few signs yet of peaking and consumer inflation expectations remaining elevated. Fresh economic data due out later Thursday morning is expected to show that headline personal consumption expenditures (PCE), one of the key inflation gauges that includes changes in gas and food prices, jumped at a 6.4% annual rate in May after April’s 6.3% clip.
Amid the myriad concerns facing markets as of late, stocks are on track to close out the worst first half of a year in decades. Based on Wednesday’s closing prices, the S&P 500 is set to post a 19.9% decline for the first six months of the year — its worst performance since 1970. For the month of June alone, the index is on track to slide by 7.6%.
All 11 major sectors in the index are heading toward monthly losses, with the cyclical energy, materials and financials sectors among the worst performers as fears over a recession have resurged. That leadership also reversed what was seen earlier this year, when energy stocks and outperformed amid oil and other energy commodities’ march higher. The more defensive health-care, consumer staples and utilities sectors outperformed in June.
Both the Dow and Nasdaq Composite also headed for marked monthly and year-to-date losses. As of Thursday’s close, the Dow had fallen 14.6% for the first half of the year, and the Nasdaq shed nearly 29%.
On the move
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Bed Bath & Beyond (BBBY) shares shed more than 4% in pre-market trading to extend losses after a more than 23% decline in the stock on Wednesday. The retailer reported same-store sales that sank more than 20% in the most recent quarter, and also announced CEO Mark Tritton would be leaving the company and the board, effective immediately, and that board member Sue Gove would take over on an interim basis.
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RH (RH) shares tumbled after the furniture company slashed its full-year outlook to forecast a revenue decline, citing “the deteriorating macro-economic environment” and lower-than-expected demand. RH now sees revenue falling between 2% and 5% this year, versus a prior outlook for sales to come in flat to up 2%.
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Constellation Brands (STZ) gained slightly Thursday morning to outperform the broader market after the beverage company posted first-quarter results that exceeded estimates on most major metrics. Comparable earnings per share came in at $2.66 versus the $2.50 expected, according to Bloomberg data, and beer net sales of $1.9 billion were $160 million better than expected.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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