Shares are heading for the worst start since 1970

The coming week will end the second quarter and first half of what has been a challenging 2022 for investors.

Several key economic reports, including core PCE inflation – the Federal Reserve’s preferred target for consumer prices – are in print, along with revenues from Nike (NKE), Jefferies (JEF), Micron Technology (MU) and Bed Bath & Beyond (BBBY) ).

The S&P 500 rose more than 3% on Friday and rose above 6% for the week, the second best week this year and the first weekly increase since the end of May.

The benchmark index continues to keep pace with the worst opening in six months since 1970. Only five times since 1932 has the S&P 500 lost 15% or more in the first six months of a year; by the end of friday, the benchmark index was down just under 18%.

“As bad as [this year] has been for investors, the good news is previous years that were down by at least 15% midway through the year, and the last six months were higher every single time, with an average return of almost 24%, says marketing strategist at LPL Financial. Ryan Detrick noted earlier this week.

And in fact, investors generally remain optimistic that an upturn is pending despite this year’s downturn.

Although analysts have lowered their price targets on S&P 500 companies in recent months – bringing the bottom-up consensus target price for the index below 5,000 for the first time since August 2021 – the estimate remains at 4,988.28 as of 23 June 31.4% over the closing period. same-day closing price of 3,795.73, according to data from FactSet.

This suggests that analysts expect the index to rise by more than 30% over the next 12 months.

The S&P 500 target price from the bottom up. versus closing price in the last 12 months.

JP Morgan strategist Marko Kolanovic indicated in a note to clients on Friday that US equities could climb as much as 7% next week as investors rebalance portfolios at the end of the month, second quarter and first half.

“Next week’s rebalancing is important since the stock markets fell significantly over the last month, quarter and six-month period,” Kolanovic said. “In addition, the market is in an oversold state, cash holdings are at record levels, and recent market discounting activity reached levels not seen since 2008.”

On the financial calendar, data on personal consumption expenditure (PCE) will be closely monitored by traders this week. The Bureau of Economic Analysis will release its monthly PCE deflator on Thursday, giving investors the latest view of inflation across the US economy as the Federal Reserve raises its benchmark rate to tame price increases.

Economists surveyed by Bloomberg expect PCE to rise 0.7% in May compared with 0.2% the month before. On an annual basis, the PCE deflator is expected to accelerate 6.4%, up from a rise of 6.3% in April.

The core PCE index, which removes food and energy costs, is expected to remain stable from last month’s print. Economists are looking for a 5.1% increase in core PCE in May, compared with an April increase of 5.1%.

US Federal Reserve Chairman Jerome Powell testifies before hearing in House Financial Services Committee in Washington, USA, June 23, 2022. REUTERS / Mary F. Calvert

US Federal Reserve Chairman Jerome Powell testifies before hearing in House Financial Services Committee in Washington, USA, June 23, 2022. REUTERS / Mary F. Calvert

The latest PCE data will come as the US Federal Reserve’s fight against inflation looks increasingly complex, with a growing number of Wall Street economists and strategists suggesting that the Fed will not be able to curb prices without tipping the economy in. in a recession.

“I am concerned that the likelihood of a soft landing, which means you can bring down inflation without unnecessarily hurting growth and employment, has dropped significantly due to a series of mistakes by the Federal Reserve,” economist Mohamed El-Erian told Yahoo Finance Live last week.

Elsewhere on the economic calendar, investors will closely monitor the figures for durable goods on Monday, the conference board’s consumer confidence will be read out on Tuesday, and several reports on production and housing throughout the week. Investors will also receive a third and final reading of GDP for the first quarter.

On the earnings side, reports from Nike (NKE), Bed Bath & Beyond (BBBY), Jefferies (JEF) and Micron Technology (MU) will be included.

Financial calendar

Monday: Orders of durable goodsso far May (0.2% expected, 0.5% last month); Durable goods except transportso far May (0.3% expected, 0.4% last month); Pending home salemonth-over-month, May (-3.9% expected, -3.9% last month); Pending Home Sale NSAyear-over-year, April (-11.5% last month); Dallas Fed’s manufacturing activityJune (-6.5 expected, -7.3 last month)

Tuesday: .Pre-trade of goodsMay (-105.4 billion expected, -105.9 billion last month, revised to -106.7 billion); Wholesale inventorymonth-over-month, currently May (2.2% expected, 2.2% last month); Retail storemonth-over-month, May (1.6 expected, 0.7% last month); FHFA Housing Price IndexApril (1.6% expected, 1.5% last month); S&P CoreLogic Case-Shiller 20-City Compositemonth-over-month, April (1.85% expected, 2.42% last month); S&P CoreLogic Case-Shiller 20-City Compositeyear-over-year, April (21.20% expected, 21.17% last month); S&P CoreLogic Case-Shiller US National Home Price Indexyear-over-year, April (20.55% last month); Conference Board Consumer ConfidenceJune (100 expected, 106.4 during last month); Richmond Fed Manufacturing IndexJune (-5 expected, -9 last month)

Wednesday: MBA mortgage applicationsweek ended June 24 (-4.2% last week); GDP Annualizedquarter-over-quarter, third quarter (-1.5% expected, -1.5% earlier); Personal consumptionquarter-over-quarter, third quarter (3.1% expected, 3.1% earlier); GDP price indexquarter-over-quarter, third quarter (8.1% expected, 8.1% previously); Core PCEquarter-over-quarter, 1st quarter second (5.1% expected, 5.1% earlier)

Thursday: Personal incomemonth-over-month, May (0.5% expected, 0.4% last month); Personal expensesmonth-over-month, May (0.4% expected, 0.9% last month); Real personal expensesmonth-over-month, May (-0.2% expected, 0.7% last month); Initial unemployment requirementsweek ended June 25 (230,000 expected, 229,000 during last week); Continued requirementsweek ended June 18 (1.310 million expected, 1.315 million during last week); PCE deflatormonth-over-month, May (0.7% expected, 0.2% last month); PCE deflatoryear-over-year, May (6.4% expected, 6.3% last month); PCE core deflatormonth-over-month, May (0.4% expected, 0.3% last month); PCE core deflatoryear-over-year, May (expected 4.8%, 4.9% last month); MNI Chicago PMIJune (58 expected, 60.3 during last month)

Friday: S&P Global US Manufacturing PMIJune finals (52.4 expected, 52.4 earlier); Construction costsmonth-over-month, May (0.4% expected, 0.2% last month); ISM ManufacturingJune (54.7 expected, 56.1 over last month); ISM prices paidJune (80.0 expected, 82.2 during last month), ISM New Orders, June (55.1 during last month); ISM employment, June (49.6 last month); Departments Total vehicle salesJune (13.40 million, 12.68 last month)

Income calendar

Monday

Before the market opens: No notable reports are scheduled for release.

After market closure: Nike (NKE), Jefferies Financial Group (JEF), Trip.com Group (TCOM)

Tuesday

Before the market opens: No notable reports are scheduled for release.

After market closure: AeroVironment (AVAV)

Wednesday

Before the market opens: Barnes & Noble Education (BNED), Bed Bath & Beyond (BBBY), General Mills (GIS), McCormick & Co. (MKC), Paychex (PAYX)

After market closure: MillerKnoll (MLKN)

Thursday

Before the market opens: Constellation Brands (STZ)

After market closure: Micron technology (MU), Walgreens Boots Alliance (WBA)

Friday

No notable reports are scheduled for release.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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