The US stock market is reeling from its worst first half of any year since 1970, with investors girding for a series of potential flashpoints in July that may set Wall Street's course for the coming months.
Second-quarter corporate earnings, hotly anticipated US inflation data and the Federal Reserve’s monetary policy meeting are among potentially pivotal events after the S&P 500 fell 20.6 per cent in the initial six months of 2022.
For now, the mood on Wall Street is grim. Bonds, which investors count on to offset stock declines, have tumbled alongside equities, with the ICE BofA Treasury Index on pace for its worst year in the index's history.
About 90 per cent of respondents in a recent Deutsche Bank survey expect a US recession by the end of 2023.
The key factor behind the turmoil in markets is the Fed, which has been rapidly tightening monetary policy to fight the highest inflation in decades following almost two years of emergency measures that helped buoy stocks and stoke growth.
“We could really use just slightly less bad news in July,” said Eric Kuby, chief investment officer at North Star Investment Management. “Hopefully, it could turn the back half of 2022 in a more favourable light.”
History, however, “does not offer very encouraging news” for those hoping the bleak first half will be followed by a bounce in the latter part of the year, wrote CFRA chief investment strategist Sam Stovall.
Of the 10 worst starts to the year for the S&P 500 since the Second World War, the index has posted gains in the second six months of the year only half the time, rising an average of 2.3 per cent, Mr Stovall said in a recent report.
On the data front, reports on employment and inflation will give investors a snapshot of the economy after 150 basis points of rate increases already delivered by the Fed.
A disappointing jobs report next Friday could exacerbate concerns of a potential recession.
The following week brings data on US consumer prices, after a hotter-than-expected report last month triggered a sell-off in stocks and prompted the Fed to deliver a hefty 75 basis point rate increase in June.
There has been recent evidence of waning growth. Data on Friday showed US manufacturing activity falling to a two-year low in June, following a report earlier in the week that showed that June consumer confidence at its lowest in 16 months.
“The key question is, what will roll over first: will it be inflation or growth?” said Angelo Kourkafas, an investment strategist at Edward Jones.
Second-quarter earnings start arriving in force the week of July 11, indicating whether companies can keep living up to estimates despite surging inflation and growth worries.
Analysts expect quarterly earnings to grow by 5.6 per cent from a year ago, revised down slightly from early April's estimate for 6.8 per cent growth, according to Refinitiv IBES.
If companies “can just match or maybe hurdle over lower expectations, I think that will be a positive tailwind for stock prices”, said Anthony Saglimbene, global market strategist at Ameriprise.
Strategists at Goldman Sachs are less sanguine, warning that consensus margin forecasts suggest earnings estimates are “likely too optimistic” and margins for the median S&P 500 company will likely decline next year “whether or not the economy falls into recession”.
“While investors are focused on the possibility of recession, the equity market does not appear to be fully reflecting the downside risks to earnings,” Goldman said in a note this week.
July’s data should factor into the Fed's actions at its next meeting on July 26 and 27, when it is broadly expected to raise rates by another 75 basis points.
Some investors predict slowing growth will prompt the Fed to eventually soften its stance sooner than policymakers project.
But analysts at Capital Economics disagreed, writing on Friday that such a rapid reversal would be inconsistent with the central bank's behaviour in recent decades.
As a result, “we don’t expect US equities and Treasuries to fare well in the second half”, they said.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
RACE CARD
6.30pm: Madjani Stakes Group 2 (PA) Dh97,500 (Dirt) 1,900m
7.05pm: Maiden (TB) Dh82,500 (D) 1,400m
7.40pm: Maiden (TB) Dh82,500 (D) 1,600m
8.15pm: Handicap (TB) Dh87,500 (D) 2,200m
8.50pm: Dubai Creek Mile Listed (TB) Dh132,500 (D) 1,600m
9.25pm: Conditions (TB) Dh120,000 (D) 1,900m
10pm: Handicap (TB) Dh92,500 (D) 1,400m
Cases of coronavirus in the GCC as of March 15
Saudi Arabia – 103 infected, 0 dead, 1 recovered
UAE – 86 infected, 0 dead, 23 recovered
Bahrain – 210 infected, 0 dead, 44 recovered
Kuwait – 104 infected, 0 dead, 5 recovered
Qatar – 337 infected, 0 dead, 4 recovered
Oman – 19 infected, 0 dead, 9 recovered
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Five ways to get fit like Craig David (we tried for seven but ran out of time)
Start the week as you mean to go on. So get your training on strong on a Monday.
Train hard, but don’t take it all so seriously that it gets to the point where you’re not having fun and enjoying your friends and your family and going out for nice meals and doing that stuff.
Think about what you’re training or eating a certain way for — don’t, for example, get a six-pack to impress somebody else or lose weight to conform to society’s norms. It’s all nonsense.
Get your priorities right.
And last but not least, you should always, always chill on Sundays.
Brief scoreline:
Manchester United 0
Manchester City 2
Bernardo Silva 54', Sane 66'
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
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Racecard
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Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
CHELSEA'S NEXT FIVE GAMES
Mar 10: Norwich(A)
Mar 13: Newcastle(H)
Mar 16: Lille(A)
Mar 19: Middlesbrough(A)
Apr 2: Brentford(H)
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
The specs
Engine: 2.0-litre turbo 4-cyl
Transmission: eight-speed auto
Power: 190bhp
Torque: 300Nm
Price: Dh169,900
On sale: now
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Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
PROFILE OF HALAN
Started: November 2017
Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga
Based: Cairo, Egypt
Sector: transport and logistics
Size: 150 employees
Investment: approximately $8 million
Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar
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UAE%20PREMIERSHIP
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Seemar’s top six for the Dubai World Cup Carnival:
1. Reynaldothewizard
2. North America
3. Raven’s Corner
4. Hawkesbury
5. New Maharajah
6. Secret Ambition
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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The%20specs
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