Stock futures remain flat as S&P 500 records worst first half in five decades

The stock market fluctuated Wednesday as investors tried to recover from the previous session's losses. The market is expected to close out the first half of the year with its worst performance since 1970.

The Dow Jones Industrial Average closed up 82.32 points, or 0.27%, at 31,029.31. The other major averages were mixed. The S&P 500 lost 0.07% to 3,818.83, while the tech-heavy Nasdaq Composite was down by 0.03% at 11,177.89.

The market's second-quarter is ending Thursday, and investors are still searching for the bottom of the decline. The concerns about the economy and rising recession risks have dominated the headlines during the first half of the year.

According to Christopher Harvey, a senior equity analyst at Wells Fargo, the market is expected to see significant volatility throughout the summer. He noted that although a much-anticipated market "washout" could catalyze a more sustained rally, the market will not be able to sustain a significant move higher until the Federal Reserve reduces its key interest rate.

"We expect significant volatility this summer, with 'face-ripping' short-covering rallies followed by economically-inspired market slumps," Harvey said Wednesday. "While a much anticipated market 'washout' could catalyze a more sustained move higher, we think the market will not sustain a rally until it believes the Fed will toggle from a 50-75bp tightening to a more mundane 25bp increase."

The S&P 500 is expected to close out the first half of the year with its worst performance since 1970 when it lost 21.01%. Quarterly, the Dow and the S&P 500 are also expected to close out their worst performance since 2020.

How other stocks perform

General Mills' stock rose about 6.4% on Wednesday after the company reported better-than-expected earnings and revenue for its most recent quarter.

In addition, Goldman Sachs' stock rose after Bank of America upgraded the stock to a buy. The bank noted that it would still be able to continue to grow even during a slower economic environment.

Amazon's stock rose after JPMorgan upgraded the stock to an overweight rating. Redburn initiated it at a buy. Other tech stocks also rose more than 1%, such as Microsoft and Apple.

On the other hand, chipmakers fell after Bank of America downgraded multiple companies due to the rising competition. Teradyne, Advanced Micro Devices, and Micron were among the losers.

Morgan Stanley downgraded Carnival's stock to underweight from an overweight, and it noted that it could go to zero in the event of another demand shock. Royal Caribbean and Norwegian led to the decline in cruise companies' stock.

Bed Bath & Beyond's stock fell more than 20% after the company reported a huge miss on its earnings and revenue expectations. The company also announced that its CEO would be stepping down.

More interest rates basis point hike

Cleveland Fed President Loretta Mester said she would like to see a 75 basis point increase in interest rates at the central bank's July meeting.

In an interview with CNBC, Mester said she did not see signs of an acceleration in inflation. She also noted that she would like to see more data to support her case for a 75 basis point increase.

The market's moves on Wednesday followed steep losses the day before. The initial gains were not enough to prevent the major averages from falling. Consumer confidence data released during the session also sent stocks lower.

According to Adam Crisafulli of Vital Knowledge, the overwhelming sentiment in the market is that it is still in a bear market. He noted that the SPX could go down another hundred points in the coming months.