North American stock markets plummet following brutal first half

Allan Small, a financial advisor, said the first six months of 2022 have been the worst run of his career. The main stock index in Canada fell to its lowest level since the start of the pandemic.

The U.S. also experienced its worst six-month run in decades as investors grew concerned that rising interest rates would tip the economy into recession.

According to Small, the year's first half will be remembered as a bloodbath in the markets. "As we hit the mid-point of the year, when you look back I think the first part of the year will be known for just a bloodbath in the markets," he said.

The Toronto Stock Exchange's main index ended the second quarter with a loss of over 14%. It was the biggest quarterly decline since December 2019. The S&P/TSX composite index, scheduled to be closed on Canada Day and the U.S. Independence Day, dropped 217.28 points.

In the U.S., the Dow Jones industrial average fell over 250 points to close at 30,775.43. Additionally, the S&P 500 index lost 33.45 points to 3,785.38, and the Nasdaq Composite dropped 149.15 points to 11,028.74.

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The S&P/TSX composite index is down about 11% this year, while the Dow Jones industrial average is down about 15%. The S&P 500 index is off about 20.6%, while the Nasdaq composite is down about 29.5%. Small said he doesn't remember the start of a year like this poorly.

Enduring steep decline

The escalating conflict between Russia and Ukraine has led to higher inflation. The supply chain bottlenecks caused by China's COVID-19 lockdowns have also declined the market.

Although the stock market suffered steep declines during the past due to the COVID-19 pandemic and the financial crisis, investors were still able to buy the dip. Many investors are still not confident that the market will bottom out this time.

According to data released by the U.S. Department of Commerce, core inflation, the Fed's preferred measure of inflation, rose by 4.7% in May. That's slightly less than the April rate but still higher than 40 years ago.

In Canada, the economy grew slower than 0.3% in April. It's believed that the country contracted in May by around 0.2%. In the U.S., the government reported that the economy contracted by 1.6 percent during the first quarter.

If the second-quarter gross domestic product report shows that the economy contracted in the U.S., it will officially confirm that the country is in a recession. However, Small noted that many economists believe Canada is already in a recession.

The advisor noted that he wouldn't be surprised to see the stock market recover during a recession as investors anticipate that inflation will eventually fall.

How each industry performs

The real estate and utility sectors were the only groups in positive territory for the day. The other nine sectors fell by more than 1%.

The health care sector led the decliners, falling 4.1%. Among the companies that fell was marijuana producer Cannicum Growth Corp., which lost 18% after announcing a convertible note exchange.

The materials sector also fell 3.6% as the prices of metals such as copper and gold dropped. Gold fell $10.20 to $1,807.30 an ounce, while copper lost 7.1 cents to settle at $3.71 a pound.

The energy sector fell 1.7% as oil and gas prices dropped. Some of the companies that were affected by this decline included Advantage Oil & Gas Ltd.