Traders on the floor of the NYSE, October 21, 2022.
Stock futures rose on Monday night as traders braced for a flurry of economic data and minutes from the latest Federal Reserve meeting this week to kick off the new year.
Futures tied to the Dow Jones Industrial Average rose 80 points, or 2%. S&P 500 futures rose 0.2% and Nasdaq 1[ads1]00 futures gained 0.2%.
All of the major averages ended 2022 with their worst losses since 2008, and each snapped a three-year winning streak. The Dow ended the year down by approx. 8.8% to 33,147.25, and 10.3% off its 52-week high. The S&P 500 lost 19.4% for the year and is now at 3,839.50, more than 20% below its record high. The technology-heavy Nasdaq fell 33.1% last year. It starts in 2023, almost 34% from the record, at 10,466.88.
Inflation triggering “the worst defeat for both stocks and bonds in decades” was the biggest investor narrative for 2022, according to Greg Bassuk, managing director of AXS Investments. The new year starts with a cloud of concern that a “harder than desired landing” by the Fed and its inflation-fighting efforts could push the economy into recession.
“2022 was characterized by an inflation-blinding market rout, in part because the year started with Wall Street and Main Street both predicting a lock in rising prices and a Federal Reserve that would keep interest rates at lower levels,” he said. “But a starkly opposite reality persisted as inflation skyrocketed.”
“Going into 2023, as prices remain substantially high, investors would be wise to consider inflation-sensitive assets, as well as cyclicals and other stocks that tend to do well in rising price environments,” he added.
Getting a bundle of data in the first trading week of the year, investors will be watching closely and looking for opportunities to adjust their portfolios to recover from the carnage of 2022. Wednesday is a big day with the Job Openings and Labor Turnover Survey, better known such as JOLTS, due out in the morning and the minutes of the Fed’s latest policy meeting due out in the afternoon.
They also look ahead to Friday’s December jobs report, the final employment report the Fed must consider before its next meeting on February 1. There are also several speeches from Fed presidents scheduled for Thursday and Friday.
First up, however, is the S&P Global Manufacturing PMI and construction costs, with a waiting time of 9:45 a.m. and 10 a.m. ET on Tuesday.
Walgreens Boots Alliance and Constellation Brands will also report their quarterly financial results on Thursday, although it’s otherwise a quiet week for earnings reports.