Stocks tumble On Growth Worries
1:59 pm Tuesday, June 28th, 2022
The market opened on a higher note to start the day. Early sentiment was driven by reports that Beijing and Shanghai had zero COVID cases for the first time since February in addition to a number of banks increasing their dividend and/or share repurchase plans after the Fed’s stress test.
There was a shift in trading mentality, however, after the weaker-than-expected Consumer Confidence Index for June at 10:00 a.m. ET. That report conjured stagflation worries with the Expectations Index dropping to its lowest level (66.4) since March 2013 and the year-ahead inflation expectations increasing to 8.0% from 7.5%. The three main indices sold off steadily after that report and are currently near their lows for the session.
The mega cap stocks have been an important downside driver. The Vanguard Mega Cap Growth ETF (MGK) is down 2.2% versus the Invesco S&P 500 Equal Weight ETF (RSP) which is down by a more modest 0.3%.
With the mega caps dragging down the three main indices, the small and mid cap stocks are faring better. The Russell 2000 (-0.6%) and S&P Mid Cap 400 (-0.3%) are outperforming the broader market today.
The S&P 500 energy sector (+2.4%) is the only sector showing sizable gains. It’s benefitting from higher oil prices, which are flowing from the reopening push in China and a Reuters report indicating Saudi Arabia and the UAE have limited spare capacity to boost output.
Nike (NKE) has been a key drag on the consumer discretionary sector following its fiscal Q4 earnings report and soft fiscal Q1 revenue guidance, but Amazon.com (AMZN) and Tesla (TSLA) have been the most influential drags.
