Just when we were starting to be OK with a depleted stock market in the final sessions of 2022 — the better to see gains in 2023 — stocks turn around an issue a rally Santa Claus would have been proud of. The Dow, which had gained nearly 420 points at its session high, gained +345, +1.05%, on the day. The Nasdaq rode big bounces from
Tesla
TSLA
and
Apple
AAPL
and gained +265 points, +2.60%. The S&P 500 split the difference, +1.74%, and the small-cap Russell 2000 kept pace most of the day with the Nasdaq, +2.55%.
It was roughly 9-to-1 buys to sells today — a decidedly un-2022-like happening — with only a half-session remaining Friday (markets close 1pm ET) for the final trading of the year. We’ll end this worst year for the markets since 2008 down double-digits for three of the four major indices; only the Dow has managed to surge back from -20% in late September/early October to single-digit losses. The Nasdaq reached its low for the year just yesterday, -35.5%.
Outside the tech-heavy Nasdaq, other indices have been generally flat since the last downturn following the latest Fed meeting. This is still the narrative market participants have been trading on; we don’t see anything potentially consequential until nonfarm payrolls for December are out, a week and a day from now. Q4 earnings season is also just a couple weeks away; will the numbers uncover an earnings recession, as some analysts have predicted? We’ll soon find out.
In the Nasdaq’s case, chances are quite good we’ll not see another -33% performance in the next year. In fact, after years of seeing software companies and social media platforms among the most overvalued stocks in the market, many of these companies have finally come back down to earth. Tesla, for instance — including today’s impressive +8% gain — is down more than -65% year to date, losing over -$100 billion in value. That seems like there’s some room for growth next year, especially if CEO Elon Musk can find a new boss for Twitter in short order.
Ultimately, nothing is set in stone for next year — not an earnings recession, not even an economic recession. This lack of clarity might provide its own drag on the market into next year, but considering we’ve spent the better part of three years trudging through a global pandemic and are now battling inflation metrics that blossomed to their highest levels in 40 years, our current lack of clarity looks like child’s play by comparison.
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