Wall Street is wrapping up a dismal year
The much-needed rally that would have spared Wall Street from a dismal end to 2022 never really came to be. Not even the relaxing of Covid-19 restrictions in China early this week provided lasting tailwinds, with both the Nasdaq Composite Index (IXIC) and S&P 500 Index (SPX) settling into losses on Monday. The two then extended that rut, with the former marking its lowest close of 2022, on the heels of pending home sales and manufacturing data, while the energy sector dragged the Dow Jones Industrial Average (DJI) lower.
Stocks showed signs of life on Thursday, though, with the Nasdaq and S&P 500 seeing their best day in December, while the Dow notched a triple-digit gain. That excitement was short-lived, as stocks pivoted lower for the last trading day of the year, despite a better-than-expected Chicago Purchasing Managers’ Index (PMI). At last check, the major benchmarks were eyeing their worst year since 2008, as well as weekly and monthly losses.
Biggest Tech Headlines
News that China will allow international travel starting Jan. 8 and ease strict Covid measures boosted Alibaba (BABA) and JD.com (JD) earlier this week. Meanwhile, blue chips Intel (INTC) and Salesforce (CRM) were competing for the title of worst Dow stock. Speaking of semiconductor names, Nvidia (NVDA) and Micron Technology (MU) tumbled as the chip shortage shifted into oversupply, while Qualcomm (QCOM) stood out as one of the worst stocks to own in January. It's also worth unpacking MicroStrategy's (MSTR) sad 2022 finish, and here's why investors should watch Amazon.com (AMZN) next year.
Airline, Auto Stocks Suffering
The winter storms that swept across the U.S. had airline stocks in focus. Delta Air Lines (DAL) and American Airlines Group (AAL) both sputtered amid flight cancellations. Yet it was Southwest Airlines (LUV) that stood out as a sector underperformer, amid reports that it will see the biggest decline in available seat miles out of any major U.S. airline.
The auto industry faced headwinds as well. China-based electric vehicle (EV) giant Nio (NIO) tumbled after slashing its delivery outlook amid recent Covid restrictions and supply chain issues. Tesla (TSLA) was not much better off, with options traders taking special interest in the stock, as it looks to close out its worst year ever.
First Week of 2023 to Pack a Punch
Next week brings another holiday-shortened week, with markets closed on Monday to observe the New Year. A slew of key economic indicators are still on tap, though, such as the S&P U.S. manufacturing and services PMI, the Institute for Supply Management (ISM) manufacturing and services indexes, the ADP employment report, and meeting minutes from the Federal Open Market Committee (FOMC). Earnings from Bed Bath & Beyond (BBBY), Conagra (CAG), Constellation Brands (STZ), and Walgreens Boots Alliance (WBA) will also come out. Keep an eye on these SPX support areas going forward, and consider 25 stocks that could see a short squeeze in 2023.