On Thursday, Wall Street closed lower as it crossed the finish line of a gloomy month and quarter, which saw the S&P 500 record the worst first six months of the year in almost half a century.

Negative territory for all

All three major stock indexes in the United States ended the second quarter of the year as well as the month in negative territory. The S&P 500 saw the biggest percentage drop in the first half since 1970. As for the Nasdaq 100, it saw its biggest percentage drop from January to June, while the Dow also experienced the steepest plunge in the first half since 1962.

Plus, it was also the second quarterly decline in a row for all three of the indexes. The last time that had happened for the Dow and S&P 500 was in 2015 and for Nasdaq, it was 2016. The year kicked off with the Omicron variant leading to rising cases of COVID-19. Then in February, Russia decided to invade Ukraine, and from then came the highest inflation numbers in decades.

This led to aggressive hikes in the interest rate by the US Federal Reserve, which has fueled fears of a possible economic recession. Market analysts said that the entire year had been about inflation and economic growth with central banks trying to address inflation with tightening financial conditions, but also trying to avoid panic.

They said that it was most likely that the economy was in recession and the real answer to figure out is how harsh it will turn out. A soft landing does not seem to be likely for now.

Data points toward recession

On Thursday, the economic data released did nothing to assuage the fears regarding an economic recession. There was a fall in disposable income, inflation remained high, consumer spending declined and jobless claims also rose. Market analysts said that consumer spending is slowing down, as inflation seems to be taking its toll.

This will affect corporate earnings, as spending contributes to earnings, and this will ultimately affect the stock market. While inflation may be close to reaching its peak, it is safe to say that it will still be way higher than the 2% annual target set by the US Federal Reserve.

Index performances

There was a 0.82% decline in the Dow Jones Industrial Average, as it fell by 253.88 points to reach 30,775.43. A 0.88% fall in the S&P 500 was also recorded, which was a loss of 33.45 points that brought it to 3,785.38. Meanwhile, the Nasdaq Composite tumbled by 1.33%, or 149.16 points, which brought it to 11,028.74.

Out of the 11 sectors of the S&P 500, eight were down, with the largest percentage drop seen in energy and the biggest gain recorded in utilities. However, energy was the only sector out of all that was able to record the most gains in the year, primarily because of the rise in crude prices because of supply concerns associated with the Russia-Ukraine war.