S&P 500 posts worst first half since 1970, Nasdaq falls more than 1% to end the quarter
Stocks fell on Thursday, as the S&P 500 capped its worst first half in more than 50 years. The Dow Jones Industrial Average shed 253.88 points, or 0.8%, to 30,775.43. The S&P 500 slid nearly 0.9% to 3,785.38, and the Nasdaq Composite pulled back by 1.3% to 11,028.74. Thursday marked the final day of the second quarter. The Dow and S&P 500 posted their worst quarter since the first quarter of 2020 when Covid lockdowns sent stocks tumbling. The tech-heavy Nasdaq Composite is down 22.4% for the second quarter, its worst quarterly performance since 2008. The S&P 500 posted its worst first half of the year since 1970, hurt by worries about surging inflation and Federal Reserve rate hikes, as well as Russia's ongoing war on Ukraine and Covid-19 lockdowns in China. "We had the unprecedented pandemic that shut the world down and the unprecedented response, both fiscal and monetary," Stephanie Lang, chief investment officer at Homrich Berg, told CNBC. "It created the perfect storm with regard to surging demand and supply chain disruptions, and now there's inflation that we haven't seen in decades and a Fed that was caught off guard." "Now the market is forced to adjust to this new reality where the Fed is trying to play catch up and slow growth," she added.

A surge in bond yields earlier in the year and historically pricey equity valuations sent tech stocks tumbling first, as investors rotated out of growth-oriented areas of the market. Rising rates make future profits, like those promised by growth companies, less attractive. The tech-heavy Nasdaq has been hit especially hard this year. The index is now more than 31% below its Nov. 22 all-time high. Some of the largest technology companies have registered sizeable declines this year, with Netflix down 71%. Apple and Alphabet have lost roughly 23% and 24.8%, respectively, while Facebook-parent Meta has slid 52%. On Thursday, Universal Health Services fell 6.1% and helped lead the market lower after it issued second-quarter earnings and revenue guidance below expectations, citing lower patient volumes. Shares of HCA Healthcare lost 4.3%. Abiomed and Viatris were lower by more than 3%. Pharmacy stock Walgreens Boots Alliance was the biggest decliner in the Dow, down 7.2% after the company reiterated its full-year forecast of adjusted per-share earnings growth in the low single digits. Cruise stocks continued to drag, after Morgan Stanley cut its price target on Carnival roughly in half Wednesday and said it could potentially go to zero. Carnival shares were down more than 2% Thursday. Royal Caribbean and Norwegian Cruise Line each fell more than 3%. Home retail stocks were down, too. High-end furniture chain RH saw shares drop about 10.6% after it issued a profit warning for the full year. Wayfair and Williams-Sonoma fell roughly 9.6% and 4.4%, respectively. Inflation and the economy The core personal consumption expenditures price index, the Fed's preferred inflation measure, rose 4.7% in May, the Commerce Department reported Thursday. That's 0.2 percentage points less than the month before, but still around levels last seen in the 1980s. The index was expected to show a year-over-year increase of 4.8% for May, according to Dow Jones. The Chicago PMI, which tracks business activity in the region, came in at 56 in June, slightly below a StreetAccount estimate of 58.3. The Federal Reserve has taken aggressive action to try and bring down rampant inflation, which has surged to a 40-year high. Federal Reserve Bank of Cleveland President Loretta Mester told CNBC Wednesday that she supports a 75 basis point hike at the central bank's upcoming July meeting if current economic conditions persist. Earlier in June, the Fed raised its benchmark interest rate by three-quarters of a percentage point, the largest increase since 1994.