Worst first half for markets in over 50 years

And when we say we’re all down bad, we mean it.

“They had us in the first half, I’m not gonna lie”

What’s that great line from The Office? “I wish there was a way to know you were in the good old days before you actually left them.” Well, newsflash folks: we’re in the bad old days right now. Welcome!

In the last six months, the benchmark S&P 500 index fell by a jaw-dropping 20.6%, while other major indexes also fell sharply. In layman’s terms, this makes for the stock market’s worst first half since 1970, meaning the situation is nothing short of a catastrophe.  

From tech – where Netflix is down by 71%, Meta by 52% and Apple by 24.8% – to things like cruise stock (Royal Caribbean and Norwegian Cruise Line each fell more than 3%) and even home retail (RH shares dropped about 10.6%, while Wayfair fell roughly 9.6%), it’s chaos across the board.

The state of play

What is to blame, then? It’s pretty clear to any sentient being in the US right now that things are far from existential bliss, but there’s bad…and then there’s really bad. Fingers have to point somewhere, and they’re all aiming in the same direction: inflation.

“It was inflation. That’s the Fed’s nemesis,” said Quincy Krosby, Chief Equity Strategist for LPL Financial. With demand overwhelming the ability to get products to market, supply chains seem to be the culprit behind the increase.

For the Fed, hindsight is making things look pretty ugly, with many Wall Street critics asking why there weren’t more aggressive plays made. And now behind the inflation curve, it’s being forced to play catch up – and interest rate hikes worth 1.5 percentage points aren’t exactly winning people over.

With more hikes ahead, the outlook is bleak. But history suggests that things are darkest before the dawn; when the S&P 500 plunged 21% in the first half of 1970, it promptly reversed those losses to gain 26.5% in the second half. So, although it’s hard to see it now – hope remains.