The S&P 500 rose in one of the last trading sessions of the year on Thursday, but stayed on course to close out its worst year since the 2008 financial crisis.
The broad stock index rose 66.06 points, or 1.7%, to 3849.28, the month’s biggest one-day gain. The technology-focused Nasdaq Composite rose 264.80 points, or 2.6%, to 10478.09. The Dow Jones Industrial Average rose 345.09 points, or 1%, to 33220.80. US equity benchmarks retreated on Wednesday.
Gains spread across all sectors on Thursday, with all 11 sectors of the S&P 500 making progress on the day. Tech stocks were among the best performers, with some of the stock markets’ recent losers outperforming the broader market.
Tesla shares, for example, shot up $9.11, or 8.1%, to $121.82. They remain down 65% for the year. Shares of Apple, Alphabet and Meta Platforms, which are heading for one of their worst years on record, also outperformed the broader market, each gaining at least 2.8%.
Recent headlines about tech layoffs seem at odds with broader economic indicators, which are showing a strong labor market and historically low unemployment rates. WSJ’s Gunjan Banerji explains the split. Picture: Ali Larkin
With only one trading session left in 2022, many investors are likely to end the year with heavy losses. As of Thursday, the Dow Industrials, the S&P 500 and the Nasdaq Composite were down 8.6%, 19% and 33%, respectively, on the year.
“Investors are desperate to end the year on a positive note, but I think that’s pretty far from the facts,” said Hans Olsen, chief investment officer at Fiduciary Trust Company.
Mr Olsen said he is heading into the new year cautiously, fearing that higher interest rates could weigh on equity returns in the coming months.
In the final days of the year, investors ponder what China’s move away from a zero-tolerance approach to Covid-19 means for markets. On the one hand, the resumption of travel to and from China could give the global economy a boost as growth slows.
On the downside, investors fear that rising demand could push up prices for energy and other commodities, forcing central bankers to raise interest rates further in a bid to curb inflation. The spread of Covid-19 in the country could also slow production and disrupt supply chains.
“That’s why we have this hot and cold market reaction,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
Thursday’s stock market jump builds on the most volatile year for the S&P 500 since the 2008 financial crisis. The broad stock market has seen 122 daily moves of 1% or more, the most in 14 years.
The end of the year also brings a feeling of déjà vu. The US is concerned that the rapid spread of the virus that causes Covid-19 in China could increase the potential for new variants. Federal officials said the US would require travelers from China to present a negative Covid-19 test starting Jan. 5.
As year-end approaches, many investors are likely to be sitting on big losses.
Photo: Michael M. Santiago/Getty Images
Many traders have this week off. This means markets are prone to outsize moves due to fewer trades, increasing volatility.
Peter van Dooijeweert, head of multi-asset solutions at Man Solutions, said investors appeared reluctant to take big risks in the market going into the new year.
“Most people assume that the first quarter will be very difficult,” said van Dooijeweert. “We will get stuck at every data point.”
Fresh data on inflation and jobs have sparked fireworks in stock markets throughout 2022, a trend Mr van Dooijeweert said he expects to continue into the new year.
In the latest reading on the health of the US economy, figures released Thursday showed the number of workers filing for unemployment benefits in the week ended December 24 stood at 225,000, up slightly from 216,000 the week before.
Much of the long-awaited “Santa Claus rally” has yet to materialize as the S&P 500 is on track for a 0.1% gain this week after some big swings. US stocks tend to rise during the Santa Claus rally – the last five trading sessions of the year and the first two of the new year.
In energy markets, Brent crude, the international benchmark for oil prices, fell 1.2% to $82.26 a barrel.
In bond markets, the yield on the benchmark 10-year Treasury fell to 3.833% from 3.886% on Wednesday. Yields and prices move in the opposite direction.
The WSJ Dollar Index, which measures the greenback against a basket of currencies, fell. The greenback is poised for its biggest annual gain since 2014, but investors are optimistic that the dollar’s strength has now come to an end.
Overseas, the pan-continental Stoxx Europe 600 edged up 0.7%. Important indices in Asia closed with losses. South Korea’s Kospi fell 1.9%, while Japan’s Nikkei 225 fell 0.9%. Hong Kong’s Hang Seng fell 0.8% and China’s Shanghai Composite fell 0.4%.
Write to Caitlin Ostroff at [email protected] and Gunjan Banerji at [email protected].
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