US stocks showed a decline of 0.82-1.33%. The industrial Dow Jones shed 0.82%, the broad S&P 500 shed 0.88% and the technology NASDAQ shed 1.33%. The indicators showed an even greater decline during the trading session (by 1.7–2.4%).
It should be noted that over the past three months, the Dow Jones index has declined by a total of 12%, the S&P 500 – by 17%. The latter has reached the lowest levels in the last two years. As for the NASDAQ indicator, it fell by 23% last quarter, and this dynamic is the worst in the last 14 years.
The most serious reason for the decline in stock indices is high inflation rates and the associated tightening of monetary policy measures by the US Federal Reserve and other central banks around the world. All this together raises concerns among bidders about a possible economic downturn in the global economy.
According to the latest statistics, the incomes of Americans increased by 0.5% in May compared to April, and expenses increased by 0.2%. The level of income increase turned out to be the same as experts predicted, and the level of expenses was lower than the forecast, which was 0.4%.
The consumer price Index (PCE) increased in May by 6.3% year-on-year. On a monthly basis, its growth was 0.6% compared to April's 0.2%.
Another indicator – PCE Core, which does not include food and energy, increased by 0.3% compared to April. On an annualized basis, it grew by 4.7%, which is the lowest increase over the past six months.
These two indicators are the main indicators of inflation, which are monitored by the Fed to determine the interest rate.
In general, the rate of inflation growth is not as high as one might expect. However, this does not mean that the central bank will switch to using less aggressive monetary policy measures.
In addition, the heads of Fed and the European Central Bank at the ECB forum, which took place this week, made it clear that they were not going to switch to a softer monetary policy. Despite the threat of recession, they intend to continue raising rates to combat rising prices.
Of the companies on the basis of which the Dow Jones indicator is calculated, 22 out of 30 showed a decline.
Walgreens Boots Alliance, Inc. (-7.3%), Salesforce, Inc. (-3.3%), and Caterpillar, Inc. (-2.6%) lost the most in price.
The value of securities of Walgreens Boots Alliance, Inc. immediately decreased by 7.3% due to a 4-fold reduction in the company's net profit in the third quarter of the fiscal year, as well as a 4.2% decrease in revenue. The company's performance was below market expectations.
Constellation Brands' stock prices fell 4.3%. The company's management is going to submit to the shareholders an initiative to simplify the structure of the share capital and abandon Class B securities.
Despite the fact that Acuity Brands managed to increase its net profit by 23.3% in the previous fiscal quarter, and revenues were higher than market forecasts, the value of its securities decreased by 1.1%.
Unity Software's stock prices fell by 6.8%. In the first quarter of this year, the number of employees was reduced by 225 people, which is 4% of the total staff.
At the same time, the value of Spirit Airlines Inc. securities increased by 6.4%. We remind you that the company is considering two potential buyers, Frontier Group Holdings Inc. and JetBlue Airways Corp., between which it will have to make a choice. A meeting of shareholders on this issue will be held on July 8.
