Traders on the floor of the NYSE, October 21, 2022.
Stock futures rose on Monday evening as traders braced themselves for economic data and minutes from the latest Federal Reserve meeting this week to kick off the new year.
Futures linked to the Dow Jones industrial average rose 80 points, or 2%. S&P 500 futures rose 0.2% and Nasdaq 100 futures added 0.2%.
All major averages ended 2022 with their worst losses since 2008, each snapping a three-year winning streak. The Dow ended the year down 8.8% at 33,147.25, 10.3% off its 52-week high. The S&P 500 has lost 19.4% for the year and is now at 3,839.50, more than 20% off its record high. The tech-heavy Nasdaq fell 33.1% last year. It starts at 10,466.88, nearly 34% from its record in 2023.
According to Greg Bassuk, CEO of AXS Investments, inflation is “the worst failure in decades for both stocks and bonds” and is the biggest investor narrative for 2022. The New Year begins with a cloud of worry that the central bank’s “harder-than-desired landing” and its inflation-fighting moves could push the economy into recession.
“2022 was characterized by an inflation-blind market trajectory as both Wall Street and Main Street began the year with the Federal Reserve holding rates low and controlling rising prices,” he said. “But a stark counter-reality was borne out as inflation rose.”
“Going into 2023, as prices remain elevated, investors will be careful to consider inflation-sensitive assets and cyclicals and other stocks that perform better in a rising price environment,” he added.
Investors get a flurry of data in the first trading week of the year, and investors will be watching closely as they look for opportunities to adjust their portfolios to bounce back from the 2022 carnage. Wednesday’s jobs and labor turnover survey, known as JOLTS, will be released in the morning and minutes of the central bank’s latest policy meeting will come out in the afternoon.
They are looking forward to Friday’s December jobs report, the final employment report the central bank must consider before its next meeting on February 1. There are also several speeches by central bankers on Thursday and Friday.
First, however, the S&P Global Manufacturing PMI and Construction Spending will be released on Tuesday at 9:45 a.m. and 10:00 a.m. ET.
Walgreens Boots Alliance and Constellation Brands will report their quarterly financial results on Thursday, though it was a quiet week for earnings reports.