US stocks fell on Tuesday morning as a busy first week of trading in 2023 began.
The S&P 500 (^GSPC) fell 0.5% after opening higher, while the Dow Jones Industrial Average (^DJI) was down 0.4%. The tech-heavy Nasdaq Composite (^IXIC) was also down 0.7%.
Early Tuesday’s moves come after Friday’s broad-based declines and make a fitting end to Wall Street’s worst year since the 2008 global financial crisis. US stock and bond markets closed Monday in celebration of New Year’s Day.
The S&P 500 plunged 19.4% in 2022, while the Nasdaq Composite wiped out a third of its value, plummeting 33% and ending its first four-quarter decline since the dot-com bubble in 2000. The Dow fell a comparatively modest 9%, holding up better than its index peers but still capping a three-year winning streak for the major averages.
Optimism about China’s recovery after researchers in Shanghai reported COVID cases may have peaked in major Chinese cities added to sentiment early Tuesday morning.
Shares of Chinese companies traded on US exchanges made headway, with Alibaba Group (BABA) and Baidu (BIDU) each rising at least 5%.
Block’s (SQ) shares are up 2% after an upgrade from Baird analysts to Outperform, with a new price target of $78 per share, up from the previous $62.
Tesla (TSLA) stayed in the spotlight earlier in the year after the electric-car maker reported record fourth-quarter vehicle production and deliveries on Monday, but still missed Wall Street estimates. Tesla’s shares plunged nearly 10%.
The company ended 2022 its worst year on record, losing 65%, or about $700 billion, in market value. In December, growing concerns about manufacturing delays in China and CEO Elon Musk’s Twitter management pushed the stock down 36%, its biggest monthly drop since Tesla went public in 2010.
Elsewhere, US Treasury yields fell early Tuesday. In 2022, the yield on the benchmark 10-year bond rose from around 1.5% at the start of the year to 3.88% on Friday.
The story goes on
Oil prices plummeted, with West Texas Intermediate (WTI) crude oil futures falling 1.7% to trade just below $79 a barrel. Meanwhile, the US dollar index rose Tuesday morning.
A new year may not be a fresh start for investors, as strategists warn that many of the headwinds that plagued markets in 2022 will persist in the new year: inflation, continued monetary tightening by the Federal Reserve and the risk of a hard landing as more rate hikes permeate the US economy.
“The story in 2022 was that the Fed hiked interest rates and stalled the stock and bond markets, and reportedly a number of other markets in the process,” Opimas CEO Octavio Marenzi told Yahoo Finance Live and Friday added that market expectations for a 5% final rate are “mindlessly optimistic”.
Stock trader Peter Tuchman reacts to the closing bell on the floor of the New York Stock Exchange December 30, 2022 in New York. (Photo by TIMOTHY A. CLARY/AFP via Getty Images)
“I don’t think the top interest rate is just 75 basis points away if you look at where inflation is,” Marenzi said. “I think there’s going to be more pain in 2023 – I think basically we’re going to see a repeat of 2022 – same kind of pressure, same direction.”
Economic data will pick up in the shortened first week of trading of the year, with the Labor Department set to release its first jobs report for 2023 on Friday morning. Economists expect jobs to rise by 200,000 in December, according to consensus estimates from Bloomberg. Investors get three additional updates on the job market, with the latest Job Openings and Labor Turnover Survey (or the JOLTS report), ADP’s private payroll data and the Challenger Job Cuts report all due.
Investors will also brace for the Fed’s release of minutes from its December policy meeting, which investors will scour for clues as to the central bank’s next move.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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