June 2022 Market Summary
It was a rough month for equities in the US and around the world, with the S&P 500 tumbling 8.3% in June. The Dow Jones Industrial Average was off “only” 6.6%, matching the performance of the MSCI Emerging Markets Index, and the NASDAQ fell 8.7% in June. The Russell 1000 and Russell 2000 (which measures small caps) posted similar drops of 8.4% and 8.2%, respectively. Red-hot inflation coupled with a global effort among central banks to tame price increases by rapidly hiking rates have been a few key drivers of 2022’s declines. For the first half of the year, the Dow is 14.4% lower while the S&P 500 and NASDAQ are both in bear market territory, down 20% and 29.2% respectively.
As a result, not a single sector ended June in the black. Energy took the largest hit, ending June 17.1% lower, and it was joined by Consumer Discretionary, Financials and Materials, which all sank at least 10%. Consumer Staples and Health Care, sectors that are typically less sensitive to Fed rate hikes, were the only two trimmed by less than 3%.
Inflation data was mixed in June, as the US Inflation Rate rose back above the 8.5% level last seen in April, to 8.58%.
Us Core Inflation, on the other hand, saw a slight decline of 0.14 percentage points to 6.02%, which suggests food and energy were among the main culprits for rising prices.
The employment situation was rather stable — May’s unemployment rate stayed at 3.6% for the third consecutive month and initial jobless claims hovered around the 230K low mark for all of June.
Finally, new single-family home sales surged 10.7%, bucking a four-month downtrend, but existing home sales fell for the fourth straight month.
Short-term interest rates shot up in June following the Fed’s announcement of a 75 basis point rate increase, the largest since November 1994. The rate on 1-Month T-Bills was 1.28% as of the end of June, representing a monthly increase of 55 points. The 3-Month T-Bill stood at 1.72% while the 6-Month T-Bill surpassed 2.5% for the first time since March 2019, logging monthly increases of 56 and 87 points, respectively. Longer-term interest rates rose in June as well — the 5-Year Note along with 20-Year and 30-Year Bonds all ended June above 3%, but the 10-Year finished the month below the 5-Year and even the 3-Year, at 2.98%.