Bears close out 2022
- Market transitions to New Year after down week, month
- Tech weak, energy strong, Treasury yields up
- This week: Jobs, FOMC minutes, manufacturing data
In many ways, the final week of 2022 was a microcosm of the entire year—the major stock indexes declined, the tech sector fell the most, the energy sector rallied, and interest rates climbed. (It wasn’t all negative, though—stocks were positive for Q4.)
The first week of 2023 will find stocks attempting to rebound after the S&P 500 (SPX) ended December with a fourth-straight down week, although the past two weeks consisted of mostly sideways price action after a sharp sell-off earlier in the month:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
The headline: Market ends 2022 in familiar fashion.
The fine print: The Nasdaq 100 (NDX) tech index fell more than twice as much as any other major US index last week, and closed at a new bear-market low on December 28.
The number: +7.1%, the SPX’s fourth-quarter return—the index’s first positive quarter since Q4 2021.
The move: Kala Pharmaceuticals (KALA) jumped from $3.92 to $38.15 (873%) last week after announcing the Food and Drug Administration accepted its “investigational new drug” application for its primary candidate product, which is intended to treat a rare corneal healing condition.
The scorecard: The small-cap Russell 2000 (RUT) eked out a small gain last week:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Sector roundup: The strongest S&P 500 sectors last week were energy (+3.8%), financials (+1.4%), and communication services (+0.9%). The weakest sectors were materials (-0.4%), consumer staples (-0.3%), and information technology (-0.2%).
Stock movers: Kala Pharmaceuticals (KALA) +99% to $24.84 on Thursday. On the downside, Cal-Maine Foods (CALM) -15% to $53.17 on Thursday, Futu (FUTU) -31% to $40.65 on Friday.
Futures: February WTI crude oil (CLG3) ended last week at $80.26/barrel—the first time it closed above $80 since December 1. February gold (GCG3) continued to edge higher last week, closing Friday at $1,826.20/ounce. Week’s biggest up moves: February gasoline (RBG3) +9.7%, April platinum (PLJ3) +9.3%. Week’s biggest down moves: February natural gas (NGG3) -7.4%, March Russian ruble (R6H3) -5.9%.
Coming this week
FOMC minutes and the first jobs report of 2023 highlight the week’s economic calendar:
●Tuesday: S&P Global Manufacturing Index, Construction Spending
●Wednesday: ISM Manufacturing Index, Job Openings and Labor Turnover Survey, FOMC minutes
●Thursday: Challenger Job Cuts, ADP Employment, Trade deficit, S&P Global Services PMI, Vehicle Sales
●Friday: Employment Report, ISM Services Index, Factory Orders
This week’s earnings include:
●Tuesday: Smart Global (SGH)
●Wednesday: Unifirst (UNF)
●Thursday: AngioDynamics (ANGO), Bed Bath & Beyond (BBBY), RPM International (RPM), Constellation Brands (STZ), Walgreen’s (WBA)
●Friday: Greenbrier (GBX)
Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.
January after a negative December
Last week disappointed investors who had kept their fingers crossed for some type of a Santa Claus Rally, as the market wrapped up 2022 with its seventh down month of the year.
There have been only eight other negative Decembers since 1985, only three of which were, like this year, part of a down year (the last one was in 2018). But these down Decembers didn’t signal anything conclusive in terms of January returns, four of which were positive and four negative. Also, only two of the eight negative Decembers (2007 and 2014), were followed by negative years.