The First Slice for Wednesday, June 29, 2022

U.S. stocks surrendered early gains to close sharply lower on Tuesday, falling for a second straight session, as downbeat economic data sowed fears about the outlook for corporate earnings.

  • The Dow fell -491.31 or -1.56%
  • The S&P 500 fell -78.56 or -2.01%
  • The Nasdaq dropped -343.06 or -2.98%

U.S. investors were forced to confront a handful of weak economic data, which helped to stoke fears about the outlook for corporate profits and guidance. Expectations for S&P 500 corporate earnings over the coming year have remained surprisingly robust this year, analysts said, leaving room for companies to share disappointing earnings and guidance when the second-quarter earnings season begins next month. 

On Tuesday, the Conference Board’s consumer-confidence index dropped in June to a 16-month low of 98.7, as Americans grew more worried about high gas and food prices and the health of the economy. Economists polled by The Wall Street Journal had forecast the index to drop to 100 from a revised 103.2 in May. Meanwhile, the Richmond Fed Manufacturing Index came in at -19, the lowest reading since May 2020. 

These data reminded investors about the possibility that the U.S. economy might already be in a recession — something that ARK Invest’s Cathie Wood discussed during a television interview Tuesday morning. 

Fears about the possibility of a recession in the U.S. have caused defensive stocks like utilities and healthcare to outperform since the start of the year, while momentum stocks like tech have been among the worst-hit. That trend continued on Tuesday, as the tech-heavy Nasdaq led the main U.S. benchmarks lower. 

Earlier in the session, U.S. stocks — and travel-related companies in particular — had gotten a boost on the news that the Chinese government had shortened its quarantine time for international travelers.

Beijing also loosened its testing requirements for people in quarantine.

In other news, six of the biggest U.S. banks said they have enough capital to either maintain or hike their dividends to shareholders after setting enough aside to handle the most extreme economic conditions expected in the coming year. 

Wells Fargo & Co. and Goldman Sachs Group Inc. both increased their payouts by 20%, while Morgan Stanley delivered an 11% rise. Bank of America Corp. increased its dividend by 5%, while Citigroup Inc. and JPMorgan Chase & Co. held their dividend flat. Shares of the largest U.S. banks generally outperformed on Tuesday…….Full Loaf Hot Link[read more]

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