The bear officially came out of hibernation in the second quarter of 2022.
Adding to a down Q1, all three major US indices fell by double-digit percentage points in Q2. The Dow ended the second quarter of 2022 10.8% lower, the S&P 500 was off 16.1%, and the NASDAQ posted a bear market performance in Q2 alone, down 22.3%.
Both the S&P 500 and NASDAQ closed out the first half of the year in bear market territory, while the Dow was down 15.3%.
Below is a sneak peek of insights from the YCharts Q2 2022 Economic Summary Deck. The deck, published quarterly, arms advisors and investors with key insights from the previous quarter to help you make smarter investment decisions going forward. The deck is also easily customizable with your own firm branding to be leveraged in client communications.
Turning to domestic stocks, US Growth’s 20.9% decline put it at the bottom of the matrix for the second consecutive quarter. The Russell 2000 Small Caps index was not far behind, tumbling 17.2%. Increasing cost of capital and shrinking company growth forecasts were largely responsible for the hard hits to these cyclically-sensitive asset classes. US Value somewhat weathered the storm that Q2 brought, ending the quarter down 12.2%.
Consumer Sentiment Falls to Weakest Level in History
The US consumer has never been more pessimistic, according to the US Index of Consumer Sentiment. Published monthly by the University of Michigan since 1952, the index reached an all-time low level of 50 in June 2022. So why is the US Consumer feeling this gloomy?
One possible explanation for the high degree of pessimism is inflation—particularly, its effect on purchasing power. June’s YoY inflation reading was 9.06%, representing the highest push in consumer prices over the last 40 years. Despite US Average Hourly Earnings rising steadily over the past ten years, US Real Average Hourly Earnings has moved in the opposite direction since April 2020. The fact that consumers are receiving higher paychecks yet have seen their average purchasing power set back to November 2018 levels may help explain the sourness in sentiment.