Economic data released on Thursday did little to allay those fears. Disposable income inched lower, consumer spending decelerated, inflation remained hot and jobless claims inched higher.
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“We’ve started to see a slowdown in consumer spending,” Said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “And it seems that inflation is taking its toll on the average consumer and that translates to corporate earnings which is what ultimately drives the stock market.”
Year-on-year growth of core inflation indicators suggest that while a peak appears to have been reached in March, they all continue to soar well above the Fed’s average annual 2 per cent target.
The Dow Jones Industrial Average fell 253.88 points, or 0.82 per cent, to 30,775.43, the S&P 500 lost 33.45 points, or 0.88 per cent, to 3,785.38 and the Nasdaq Composite dropped 149.16 points, or 1.33 per cent, to 11,028.74.
Eight of the 11 major S&P sectors ended down, with utilities leading the gainers and energy notching the largest percentage drop.
But energy was to only major sector to post a year-to-date gain, aided by crude prices spiking over supply concerns due to Russia-Ukraine conflict.
The major stock indexes lost ground in June, with the S&P 500 logging its largest June percentage decline since the financial crisis.
Second-quarter reporting season begins in several weeks, and 130 of the companies in the S&P 500 have pre-announced. Of those, 45 have been positive and 77 have been negative, resulting in a negative/positive ratio of 1.7 stronger than the first quarter but weaker than a year ago, according to Refinitiv data.
Worries over inflation dampening consumer demand and threatening profit margins will have market participants listening closely to forward guidance.
Walgreens Boots Alliance Inc fell 7.3 per cent as its quarterly profit plunged 76 per cent, hurt by its opioid settlement with Florida and a decrease in US pharmacy sales on waning demand for COVID-19 vaccinations.
Declining issues outnumbered advancing ones on the NYSE by a 1.75-to-1 ratio; on Nasdaq, a 1.52-to-1 ratio favoured decliners.
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The S&P 500 posted one new 52-week high and 42 new lows; the Nasdaq Composite recorded 17 new highs and 367 new lows.
Volume on US exchanges was 12.58 billion shares, compared with the 12.86 billion average over the last 20 trading days.
