By Stephen Culp

NEW YORK (Reuters) – Wall Street gained ground in light trading on Friday, the first session of the second half of 2022, as investors headed into the long holiday weekend looking for the next market-moving catalyst.

All three major U.S. stock indexes bounced off session lows, and were last modestly higher in the wake of the stock market’s worst first half in decades.

All three were on track to post weekly losses.

“It’s a Friday before a major long summer weekend, so it’s not a big volume day,” said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.

Market participants now look to the second-quarter earnings season, the Labor Department’s June employment report, and the Federal Reserve’s monetary policy meeting expected later in July.

The microchip sector dropped sharply after Micron Technology Inc (NASDAQ:) warned of cooling demand.

Micron’s shares slid 2.7%, pulling the down 3.8%.

Worries over waning demand in the face of decades-high inflation were reflected in the Institute for Supply Management’s (ISM) purchasing managers’ index, which showed a deceleration in both new orders input prices.

ISM’s report seemed to back the view that the economy is cooling and inflation appears to be past its peak. This has raised questions about whether the Fed will have wiggle room for a dovish pivot after its second straight 75 basis point interest rate hike expected in July.

“The Fed is going to need to see a lot more evidence to change its mind about further continued interest rate hikes,” Ghriskey added. “There’s still a lot of uncertainty about the economy and inflation despite early signs that inflation may have peaked.”

The rose 227.33 points, or 0.74%, to 31,002.76, the gained 24.73 points, or 0.65%, to 3,810.11 and the added 45.03 points, or 0.41%, to 11,073.77.

Of the 11 major sectors in the S&P 500, utilities were enjoying the largest percentage gains, while tech was down the most.

Second-quarter reporting season begins in several weeks, and 130 of the companies in the S&P 500 have pre-announced. Of those, 45 have been positive and 77 have been negative, a weaker negative/positive ratio than a year ago, according to Refinitiv data.

The prospect of profit margins taking a hit from bruising inflation and waning consumer demand will have market participants listening closely to forward guidance.

Analysts now expect aggregate second-quarter S&P 500 earnings growth of 5.6%, down from the 6.8% projected at the beginning of the quarter, per Refinitiv.

Meta Platforms Inc fell 1.5721% after the Facebook (NASDAQ:) parent’s CEO Mark Zuckerberg warned employees to brace for a deep economic downturn.

Department store chain Kohl’s Corp (NYSE:) shares tumbled 17.3% following its decision to halt talks of a possible sale to Franchise Group (NASDAQ:).

Advancing issues outnumbered declining ones on the NYSE by a 1.70-to-1 ratio; on Nasdaq, a 1.27-to-1 ratio favored advancers.

The S&P 500 posted one new 52-week high and 48 new lows; the Nasdaq Composite recorded 8 new highs and 201 new lows.