4.05pm: Santa Claus rally comes late for Wall Street
US stocks finished the day sharply higher as traders look to close the books on a disappointing 2022 for equities.
At the close, the Dow gained 345 points to 33,221, while the S&P 500 added 66 points at 3,849 and the tech-heavy Nasdaq climbed 265 points to 10,478.
Big Tech led the charge, with shares of Tesla Inc racing ahead more than 7% after the stock snapped a seven-day losing streak.
12:02 pm: Stocks continue to climb
At midday, the Dow was up 397 points, 1.2%, to 33,273, the Nasdaq Composite added 280 points, 2.8%, to 10,494 and the S&P 500 improved 72 points, 1.9%, to 3,855.
It's not quite technically a Santa rally, but the indexes are now on pace to come out ahead or flat on the week. That's a far cry from how things closed on Wednesday.
“We were overdue for a rebound, and a lot of the recent weakness may be explained by further tax loss selling once the Santa Rally didn’t materialize,” said Louis Navellier, chief investment officer of growth at the investing firm Navellier & Associates, according to reports. “We’ll have further volatility into the new year with plenty of uncertainty about whether a soft landing is possible and if not how much resolve the Fed will have to not pivot if we tip into a serious recession.”
9:47 am: Jobless claims higher than expected
Shortly after the opening bell, the Dow was up 229 points, 0.7%, to 33,104, the Nasdaq Composite surged 155 points, 1.5%, to 10,369 and the S&P 500 jumped 40 points, 1%, to 3,823.
The rally is a reversal of Wednesday's selloff, but the benchmarks remain on pace to end 2022 with a down week.
Investors are reacting in part to new Labor Department data. First-time jobless claims totaled 225,000 last week, an increase of 9,000 and higher than the estimate of 223,000 from Dow Jones, according to reports.
More broadly, the indexes are headed for their worst year since 2008.
“Investors are anticipating an economic recession to materialize early in 2023, as evidenced by the three quarters of projected S&P 500 earnings declines and continued defensive sector leanings,” said Sam Stovall, chief investment strategist at CFRA Research, as reported by CNBC. “The severity of the recession remains in question. We expect it to be mild.”
7:00 am: Tentative hope for Thursday rally
US stocks are looking to edge higher again at the open on Thursday, but having started positively in the previous session only to drop back sharply by the close, investors are likely to remain wary about a possible end-of-year recovery.
Futures for the Dow Jones Industrial Average (DJIA) were 0.2% higher in pre-market trading, while those for the S&P 500 were ahead 0.4%, and contracts for the Nasdaq 100 futures added 0.6%.
Wall Street's main indexes ended weaker on Wednesday, with the Nasdaq hitting a 2022 closing low, as investors grappled with mixed economic data, rising COVID-19 cases in China, and geopolitical tensions heading into 2023. The DJIA ended down 1.1%, while the S&P 500 dropped 1.2%, and the Nasdaq Composite dived 1.4%.
Craig Erlam, senior market analyst, UK & EMEA, OANDA: "We continue to drift into year-end with investors having little to cling onto that's going to drive markets one way or another. That is so often the case this time of year and while 2022 could have been different, given how chaotic the rest of the year has been, it has proven to not be the case. Investors are going into 2023 with a cautious mindset, prepared for more rate hikes, and expecting recessions around the globe. The bar is low but arguably reasonably so."
He added: "While markets have remained choppy over the last couple of weeks, we haven't seen any major developments that have changed the narrative at all going into next year. Well, perhaps ex-Japan where the central bank's policy tweak may embolden those wanting to take it on more forcefully in the months ahead.
"Elsewhere, the focus will remain on terminal rates and just how forceful central banks will be in their bid to defeat inflation. The Fed in particular has remained very bullish on its rate intentions, so much so that it may have spooked investors a little at this month's meeting. But that could quickly change in Q1 if the data allows.
"And then there's China and its u-turn on Covid prevention. It's been quite the shift from fighting every case to living with the virus and that creates enormous uncertainty for the start of the year as case numbers surge and the health system is overwhelmed. How the leadership will respond is about as clear as the data itself so for investors it will be a case of learning as we go using what little data and anecdotal evidence we have. That creates challenges domestically and in all likelihood globally as well."
On the corporate front, Tesla shares are headed for their worst-ever year, under pressure on new demand concerns and a shutdown at its China factory. But Tesla stock regained some ground Wednesday and looked poised to extend that rally Thursday, adding 3.6% premarket.
Exxon Mobil was 0.7% lower pre-market after the oil giant filed a lawsuit contesting the European Union's windfall levy on high energy profits after Russia’s invasion of Ukraine.