4.10pm: Little Christmas cheer on show as US markets fall
US markets failed to get into the festive mood heading downwards for a fourth day in a row as investors continued to fret that higher interest rates will dent economic growth.
At the close the Dow Jones Industrial Average was down 164 points, or 0.5%, to 32,757, the S&P 500 slipped 35 points, or 0.9%, to 3,817 and the Nasdaq Composite declined 159 points, or 1.5%, to 10,546.
“As we near the end of December, investors are still waiting on that Santa Claus Rally, with stocks coming off back-to-back down weeks for the first time since September,” Chris Larkin, managing director of trading at E*Trade from Morgan Stanley (NYSE:MS) told CNBC.
Investors will be hoping earnings from FedEx (NYSE:FDX) and Nike tomorrow after the market close can bring some positive news ahead of the holiday period.
Stocks on the move included The Walt Disney Company (NYSE:DIS) which fell 4.8% as takings from the opening weekend of the Avatar sequel “Avatar: The Way of Water" fell short of industry expectations.
While Amazon.com Inc (NASDAQ:AMZN). shares fell 3.5% as Evercore ISI’s Mark Mahaney lowered his estimates and price target saying the investment firm’s recent 2023 outlook report suggests further weakness ahead for online retail and cloud computing.
12.05pm: Wall Street sees further selling following back-to-back weekly losses
US stocks continued to fall, after recording consecutive weekly losses for the first time since late September, as recession concerns persist.
At midday, the Dow lost 84 points to 32,836, while the S&P 500 eased 26 points at 3,827 and the tech-heavy Nasdaq slipped 134 points to 10,572.
“As we near the end of December, investors are still waiting on that Santa Claus Rally, with stocks coming off back-to-back down weeks for the first time since September,” E*Trade managing director of trading Chris Larkin said.
“Data showing inflation cooling may have given the market a short-lived boost, but the Fed standing firm with Powell driving home the point that rates could remain elevated for quite a while likely grounded some investors,” Larkin added.
Notable movers included shares of The Walt Disney Company (NYSE:DIS), which gave back more than 3% after ticket sales of “Avatar: The Way of Water” fell short of box office estimates.
9.35am: Still no Santa Rally in sight
US stocks slipped slightly at the open on Monday, kicking off the last full trading week of the year.
Just after the market opened, the Dow Jones Industrial Average had shed 39 points or 0.1%, the S&P 500 was down 5 points or 0.1% at 3,848 points, and the Nasdaq Composite was down 25 points or 0.2% at 10,680 points.
Forex.com market analyst Fiona Cincotta noted that the week was off to a quiet start.
“The market mood remains cautious amid fears that aggressive policy tightening by the US Federal Reserve could hamper economic growth next year and tip the US economy into a recession,” she said.
“While the economic calendar is quiet today, Wednesday sees the release of the Conference Board consumer confidence index, and Friday sees the release of the core PCE index, which is the Federal Reserve’s preferred measure of inflation.”
Meanwhile, Tesla stock was up about 1.5% at the open after CEO Elon Musk polled Twitter users on if he should step down as the head of the social media platform and 57.5% of respondents voted “yes.”
“Musk has yet to respond, but Tesla rallied on optimism that he may leave his position as CEO,” Cincotta said.
6.30am Another shaky start
US stocks are expected to open slightly higher after two straight weeks of losses, as investors struggle with the likelihood of a prolonged recession in the world’s biggest economy as the Federal Reserve pursues rate hikes in its fight against inflation.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.3% in pre-market trading, while those for the broader S&P 500 index added 0.4% and contracts for the Nasdaq-100 gained 0.5% with traders crossing fingers that a Santa Rally may kick in on the last week of dealing before the holidays.
“Recession fears continue to throw something of a shadow over Wall Street but with investors in bargain-hunting mode as the Christmas wind-down gets into full swing, futures are suggesting that a degree of support may be in evidence in Monday’s early trade,” noted James Hughes, chief market analyst at scopemarkets.com.
Last week, the Federal Reserve lifted interest rates by 50 basis points and signaled that its fight to dampen inflation is not over despite its year-long spate of rate increases. Investors reacted nervously as they fear that the current rate hiking cycle may run too deep and too long, with punishing effects on overall economic activity.
Still, some sections of the market are hoping for a year-end bargain-hunting spree to shore up stock prices despite the prevailing concerns.
“How long that glass-half-full view can be sustained for remains to be seen, but with a relatively quiet economic calendar ahead, it could well be personal income and spending data plus the durable goods orders – all due on Friday – that could provide the next big signal,” noted Hughes.
“There’s certainly downside risk to be mindful of here, but perhaps most critical is that if the 2022 Santa rally doesn’t materialise, it needs to be taken in the context of the strong run posted by Wall Street over the last few months," the commentator said.
It has certainly been a topsy-turvy year for stock markets, what with the after-effects of Covid-related restrictions, Russia’s aggression in Ukraine and volatile energy prices to contend with.
“Markets have already brushed off key macro factors ranging from rising Covid cases in China, the associated potential global supply chain disruption, no let-up in the monetary policy tightening narrative and Russia’s ongoing war in Ukraine. Even if it is a turbulent run into the year-end, equity indices could still be looking a whole lot worse,” concluded Hughes.
Contact the author at jon.hopkins@proactiveinvestors.com