Stocks fell on Tuesday as the final trading week of the year began as investors weighed the economic outlook for 2023.
The Dow Jones Industrial Average was last up 122 points, or 0.35. The S&P 500 traded flat, while the Nasdaq Composite fell 0.8%.
Stocks linked to China rose The country eased Covid restrictions. Tesla collapsed 5% on news of extended production suspensionwhen Southwest fell 4% as the airline canceled thousands of flights.
Yields also rose, putting pressure on growth stocks like tech. yield on that day 10 Year Treasury The benchmark was last up 5 basis points at 3.798%.
“Essentially high yield is a continuation of growth that is redistributed to other sectors that are smaller, but not large enough to change the headline index,” said Truist’s Keith Lerner.
A combination of tax loss selling, portfolio restructuring and investors deciding where to position their portfolios for 2023 could also weigh on the indices, said Sameer Samana, senior global market strategist at Wells Fargo Investments.
Stocks posted their worst annual performance since 2008 and another weak month, with the Dow and S&P falling 8.4% and 19.5%, respectively. The Nasdaq fell 33.5%.
In December, the S&P fell 6%, while the Dow and Nasdaq fell 3.8% and 9.3%, respectively. The major averages are on pace for their biggest monthly declines since September.
After a brutal year consumed by inflation and recession fears, investors were hoping to end 2022 on a positive note. Friday started the season for the Santa Claus rally, ie Generally considered the final five-day trading stretch of the current yearas well as the first two trading days of the new year.
Questions also linger about whether volatility will continue into 2023 and what the economy and inflation will bring as the calendar year turns a corner.
Markets were closed on Monday for the Christmas holiday. In this shortened trading week, investors expect relatively quiet or more volatility due to low trading volumes.