Traders on the floor of the NYSE, October 21, 2022.
Stock futures rose late Monday as traders braced for a flurry of economic data and the minutes of the Federal Reserve’s latest meeting this week to kick off the new year.
Futures contracts linked to the Dow Jones Industrial Average rose 80 points, or 2%. S&P 500 futures climbed 0.2% and Nasdaq 100 futures added 0.2%.
All major midfielders closed 2022 with their worst losses since 2008, each ending a three-year winning streak. The Dow Jones ended the year down about 8.8% at 33,147.25 and 10.3% from its 52-week high. The S&P 500 lost 19.4% on the year and now sits at 3,839.50, more than 20% below its all-time high. The tech-heavy Nasdaq fell 33.1% last year. It starts 2023 at almost 34% of its all-time high, at 10,466.88.
Inflation causing “the worst defeat for stocks and bonds in decades” has been the biggest investor narrative for 2022, according to Greg Bassuk, CEO of AXS Investments. The new year kicks off with a cloud of worry that a “harder than desired landing” from the Fed and its inflation-fighting measures could push the economy into a recession.
“2022 was characterized by an indiscriminate inflation market rout, in part because the year began with Wall Street and Main Street both anticipating a containment of rising prices and a Federal Reserve holding rates at lower levels,” he said. “But a fiercely opposite reality persisted as inflation soared.”
“In 2023, as prices remain materially elevated, investors would be cautious to consider inflation-sensitive assets, as well as cyclical and other stocks that tend to perform well in rising price environments,” he said. he added.
Investors are getting a data set in the first trading week of the year and investors will be watching closely, looking for opportunities to adjust their portfolios to recover from the carnage of 2022. Wednesday is a big day with the Job Openings and Job Rotation Survey, better known as JOLTS, due out in the morning and the minutes of the Fed’s latest policy meeting due out in the post- midday.
They are also eagerly awaiting Friday’s December jobs report, the last jobs report the Fed will have to consider before its next meeting on Feb. 1. Several speeches by Fed chairs are also scheduled for Thursday and Friday.
The first, however, are the S&P Global manufacturing PMI and construction spending, which are due out at 9:45 a.m. and 10:00 a.m. ET Tuesday.
Walgreens Boots Alliance and Constellation Brands will also release their quarterly financial results on Thursday, though it’s an otherwise quiet week for earnings reports.