The indices turned a promising start into a downside disaster yesterday, as that Santa https://www.newbridgesecurities.com/market-research/wp-admin/edit.phpClaus rally is fading away like one of his tired reindeers.
And after a very good start of the Dow ahead by 138, the S&P higher by 19 and the Nasdaq up by 61, things began to weaken and all the indices turned negative at 10:30am and from there it was all sharply downhill into the close, with the collapse of AAPL for its eighth straight decline culminating in a horrible close.
As a result, the Dow, which had been higher for four out of the past five sessions and down by “only” signal digits for the year up until yesterday due to strength in its energy and industrial components like CVX, BA and CAT in particular, joined the other indices and led on the downside with a final 366 point shellacking to 32,875, as it collapsed in the final hour and a quarter by 244 points alone.
The S&P also got whacked with a 27 point collapse from 2:45pm into the close for a final 46 point downside wipeout to 3783. It was hurt badly by AAPL which lost 4 points, a large slide for this one which had held up relatively better than its other downside disasters such as TSLA, up a few points after a 70% collapse this year, along with others that have lost more than 60% such as META, AMD, NVDA and NFLX.
The Nasdaq as a result of these awful performers ended 140 points lower to 10,213 and is now 35% off for the year, one of its worst showings ever. The Russell 2000 Index of small stocks did not have a chance with a 27 point loss to 1722 while the VIX rose to 22.14 and once again it has been very calm on the upside considering the downside damage that has been done this year.
According to Bespoke, the Russell 3000 Index, which basically covers the entire market, lost $6.7 trillion in 2008 and this year it has given back $11.2 trillion with $5.2 trillion coming from the big guys like AAPL, AMZN, MSFT, GOOG, TSLA, NFLX, NVDA and AMD, among other former upside darlings.
With two more days of trading left in 2022, the S&P is now 20% lower for the year, even as profits and margins for companies in the index hit record heights in 2022 while the Dow is down by 9.5% with the Nasdaq bringing up the rear, on pace to plunge 34.7%.
The homebuilder stocks fell on a weak report for November pending home sales doing poorly(see below) while energy stocks came down on a slide in crude oil prices after three straight weeks of gains while natural gas prices plunged by 10.8% and please don’t complain about this because it is wonderful for consumers as we are now in the main heating oil and propane usage season after the record storms that paralyzed much of the country this week.
LUV slid again as the carrier grappled with the fallout after thousands of flight cancellations. The airline’s CEO said it could be next week before the flight schedule returns to normal which is really pathetic and shows a complete managerial failure.
Bond yields were mixed with the 10-year yield rising to 3.88% from 3.85% Tuesday while the 2-year dipped to 4.34% from 4.38% late Tuesday and this continued to narrow in the inversion down to 46 basis points from 82 recently which has to be a good sign.
This week is light on earnings with: today – CALM lower
Economic reports will have: yesterday – November pending home sales fell by 4% for the sixth straight decline to the second lowest on record; today – weekly jobless claims rose by 9K to 225K; Friday – December Chicago Business Barometer.
Donald M. Selkin
Chief Market Strategist
Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our current or potential customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analysis concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, and Associated Press}. It is possible that at any given point in time, the author, Newbridge Securities, or one or more of its employees or registered individuals associated with Newbridge Securities, may hold a position, either long, or short, as well as options, bonds or other instruments in the companies mentioned in this report.