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A broad down day for the major indexes put the cherry on the melted sundae that was the stock market’s first half of trading in 2022.

The S&P 500 declined 0.9% on Thursday to 3,785, securing a 20.6% decline for the year’s first six months – its worst such performance since bombing out by 21% during 1970’s first half.

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A glimmer of hope for today’s hurting investors: That year, the S&P 500 followed up its implosion with a 26.5% rebound through New Year’s Eve. Whether we get the same remains to be seen, but Dan Wantrobski, technical strategist and associate director of research at Janney Montgomery Scott – who provided us with a potential market-bottom target yesterday – notes that the market is pretty oversold right now, and that we could at least see a short-term bounce.

“If one materializes, continue to watch for initial resistance first toward 4,100-4,200, then closer to the 4,400-4,500 zone [after that],” he says.

But for now, investors are licking their wounds.

“The S&P 500 reached an all-time high on the very first trading day of the year, but then promptly suffered through one of its toughest first-half performances ever, along with a pummeling in most major financial markets,” says Douglas Porter, chief economist for BMO Capital Markets. “The challenging environment started and ended with inflation – and the increasingly urgent central bank campaign to control it – further aggravated by the Ukraine invasion in late February.”

Now? Energy-driven supply shocks are forcing global growth expectations lower even as inflation remains red-hot.

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The market received a potential sign that price gains might moderate, though it wasn’t enough to lift investor spirits. The Bureau of Economic Analysis reported that the personal consumption expenditure (PCE) index for May rose 0.2% month-over-month (MoM), below expectations for 0.4%. Core PCE (which excludes food and energy, and is the Federal Reserve’s preferred measure of inflation) was up 0.3% MoM.

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“Most measures of inflation have likely peaked, although tight inventories of oil, gas, and diesel mean risks to energy prices are still to the upside.” says Bill Adams, chief economist for Comerica Bank. Still, “Americans are running faster just to stay even,” he adds, as rising costs of living absorbed all the increased spending power from added jobs and higher wages in May.

The Dow Jones Industrial Average followed the S&P 500 lower, dipping 0.8% to 30,775 – a 15.3% first-half loss. The Nasdaq Composite’s 1.3% drop to 11,028 locked in a massive 29.5% decline over 2022’s first six months.

YCharts

Other news in the stock market today:

• The small-cap Russell 2000 declined 0.7% to 1,707.
• U.S. crude oil futures dropped by 3.7% to $105.76 per barrel.
• Gold futures edged 0.6% lower to $1,807.30 per ounce.
• Bitcoin bled out by 6.7% to $18,895.16. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.) 
• Pfizer (PFE, +2.9%) and BioNTech (BNTX, +5.0%) both popped after announcing late Wednesday that they had collectively reached a $3.2 billion deal to provide 105 million COVID-19 vaccine doses to the U.S. government.

Let Data do the Work?

Stock market investors don’t exactly have an easy path in the year ahead. Lindsey Bell, chief markets and money strategist for Ally Invest, provides a sobering outlook:

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“Pessimism is everywhere you look. Consumers, business leaders, economists and my neighbors are all downbeat about the future of economic growth. Inflation has taken on greater significance in this view as the consumer inches ever closer to a tipping point on higher prices. The Fed’s commitment to tame inflation is leading to more confusion and uncertainty for investors. The greatest fear is that the Fed will force a recession by rapidly increasing interest rates.”

Obviously, 2022 has been a brutal year for most investors. So why not heed one of the rare strategies to do quite well?

Danelfin, an artificial intelligence (AI)-driven analytics platform, uses AI to analyze more than 900 fundamental, technical and sentiment data points per day for 1,000 U.S.-listed shares and 600 stocks listed in Europe. As we’ve checked in on it throughout the year, it has done well against the market – and especially well of late. The fintech’s top 10 stock picks generated a price return of 2.1% from March 11, which is the last time we looked at Danelfin’s picks. The S&P 500? It’s down 7.5% during that span.

Read on as we look at what Danelfin AI system says are the top stocks to watch right now.

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