Stocks pace towards worst start since 1970

The week ahead will bring to an end the second quarter and the first half of what has been a challenging 2022 for investors.

Several key economic reports, including core PCE inflation – the Federal Reserve’s preferred measure of consumer prices – are on tap, along with earnings from Nike (NKE), Jefferies (JEF), Micron Technology (MU), and Bed Bath & Beyond (BBBY).

The S&P 500 rose by more than 3% on Friday and gained over 6% for the week, its second-best week this year and its first weekly rise since late May.

The benchmark index still remains on pace for one its worst opening six months since 1970. Only five times since 1932 has the S&P 500 lost 15% or more in the first six months of a year; through Friday’s close, the benchmark index was down just under 18%.

“As bad as [this year] has been for investors, the good news is previous years that were down at least 15% at the midway point to the year saw the final six months higher every single time, with an average return of nearly 24%,” LPL Financial chief market strategist Ryan Detrick noted earlier this week.

And indeed, investors remain generally optimistic that a rebound is ahead despite this year’s downturn.

Although analysts have lowered their price targets on S&P 500 companies in recent months — bringing the consensus bottom-up target price for the index below 5,000 for the first time since August 2021 — the estimate of 4,987.28 as of June 23 remains 31.4% above the closing price of the same day’s closing price of 3,795.73, according to data from FactSet.

This suggests analysts expect the index to rise by more than 30% in the next 12 months.

The S&P 500 bottom-up target price. vs. closing price over the past 12 months.

J.P. Morgan strategist Marko Kolanovic indicated in a note to clients Friday that U.S. equities may climb as much as 7% next week as investors rebalance portfolios amid the end of the month, second quarter, and first half of the year.

“Next week’s rebalance is important since equity markets were down significantly over the past month, quarter and six-month time period,”…


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