Stock market news for July 12, 2022

U.S. stocks ended mostly lower on Monday after markets faltered as investors braced for quarterly earnings from some major companies and another round of inflation readings that are likely to remain elevated. The three main indexes ended in negative territory.

How did the benchmarks work?

The Dow Jones Industrial Average (DJI) fell 0.5% or 164.31 points to end at 31,173.84 points, after entering positive territory for a short period in the afternoon. This is the biggest drop in the blue chip index since June 30.

The S&P 500 slipped 1.2% or 44.95 points to end at 3,854.43 points. It is also the index’s biggest drop since June 28. Energy stocks were the worst performers. Communication services and consumer discretionary stocks were the big losers.

The SPDR of the select Communication Services (XLC) sector fell 3%, while the SPDR of the select Consumer Discretionary (XLY) sector fell 2.7%. The Technology Select Sector SPDR (XLK) lost 1.4%. Nine of the benchmark’s 11 sectors ended in negative territory.

The tech-heavy Nasdaq fell 2.3% or 262.71 points to close at 11,372.60 points. The index posted its worst single-day loss since June 28.

The CBOE Volatility Index (VIX), a gauge of fear, rose 6.21% to 26.17. Decliners outnumbered advances on the NYSE by a 2.41-to-1 ratio. On the Nasdaq, a 2.81-to-1 ratio helped lower issues. A total of 9.33 billion shares were traded Monday, below the 20-session average of 12.92 billion.

Inflation and recession again worry the markets

Wall Street ended on a high last week after performing well in recent days. Soaring inflation and the Fed’s aggressive rate-hike policy that could slow economic growth were already existing concerns weighing on equities.

Markets ended higher on Friday after impressive jobs data, but inflation and recession fears returned to haunt on Monday. Investors are also bracing for another hot inflation reading set to come out this week. June’s headline annual inflation rate is expected to be higher than May’s, which should give the Fed another chance to opt for a big rate hike.

This worries investors, as it could lead to a massive economic slowdown. In addition, investors are eagerly awaiting the earnings season which begins this week. A wave of big companies is expected to report earnings this week. However, investors are no longer concerned with how companies’ earnings are reported, but rather with their future business prospects.

This will determine the state of the economy in the months to come. This weighed heavily on investor sentiment, which sent stocks falling further on Monday.

Consumer discretionary stocks were one of the biggest losers. Shares of Royal Caribbean Cruises Ltd. RCL fell 5.4%, while Norwegian Cruise Line Holdings Ltd. NCLH fell 4.9%.

Tech stocks also took a beating, with shares of Amazon.com, Inc. AMZN falling 3.3%. Amazon each wears a Zacks Rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Alphabet Inc. GOOGL and Apple Inc. AAPL fell 3.1% and 1.5%, respectively.

Rise in COVID-19 cases worries investors

Investors have recently been concerned about the rise in COVID-19 cases in China and the resulting lockdown. The country has imposed strict restrictions in a number of cities where new cases of the highly contagious BA.5 omicron subvariant are on the rise.

China accounts for over 25% of global manufacturing and a shutdown will again disrupt the supply chain globally. It’s not just in China, but new COVID-19 cases are rising across the globe, worrying investors and weighing on stocks.

No economic data was released on Monday.

Zacks names ‘only one best choice for doubling up’

From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.

It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.

This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.

Free: See our best stock and our 4 finalists >>

Click to get this free report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Apple Inc. (AAPL): Free Inventory Analysis Report

Royal Caribbean Cruises Ltd. (RCL): Free Stock Analysis Report

Norwegian Cruise Line Holdings Ltd. (NCLH): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

James T. Quintero