The Last Trading Day in 2022 | Daily Market Analysis

Key events:      

• New Year's Day – Early close

The situation seems to be developing according to the worst possible scenario one could come up with for these New Year's Eve days. Santa clearly does not want to come to the stock market. New fears of coronavirus and old fears of a possible recession in the coming 2023 are weighing on investors and keeping the stock bulls from raising their heads. It seems that the latter is trying to resist, but in the end, they do not succeed and day by day they give up one position after another.

U.S. stock indices ended Thursday's trading with a significant increase on data indicating a weakening labor market in the U.S., which was perceived by investors as another argument in favor of the soon-ending cycle of tightening monetary policy.

The Dow Jones Industrial Average rose 1.05% to 33220.8 points. The Standard & Poor's 500 rose 1.75% to 3,849.28 points. Nasdaq Composite gained 2.59 percent to 10,478.09 points.

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By the end of the trading day, Tesla shares gained 8.1%. The day before, the stock broke a streak of declines that lasted eight consecutive sessions and was the highest since 2018.

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What is interesting is that the NASDAQ index is losing ground day after day, and every day there is a heavyweight dragging the entire index down. Two days ago it was Tesla that lost more than 11% of its capitalization at a time, and recently Apple was among the worst-performing stocks with a loss of more than 3%. In the meantime, its stock price was down to June 2021 levels. The main negative for these shares was the report of poor pre-Christmas sales of the new iPhone 14, which, along with information about the reduction of the production of iPhones at the plant in Chenzhou, China led to the fact that the capitalization of the largest company in the world fell to $2 trillion and may fall even more. In short, instead of a Santa rally, the market continues to roll steadily downhill, sinking to the marks of a year or even 2 years ago.

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Today is the last trading day of the year. It is extremely difficult to predict its outcome. Of course, we want to believe in the best and some people keep hoping that Santa won't forget about the stock market and will come here at least for a day. However, the situation so far does not look happy. So even Hong Kong, which has been super-positive over the last few days, could not resist the general negativity and its main index has surrendered to the bears and is trading today with losses of about 1% from yesterday's close.

Futures of major U.S. indices are still heroically holding near zero, but as we've seen in the last few days, that doesn't mean anything and a small increase easily turns into an elegant drop in the main trading. Some investors might be hopeful that the release of the unemployment claims data today will improve the market sentiment, but most likely this data will have zero effect and market participants will react with indifference. Now the market is acting on deeper fears and whether they will disappear at least before the New Year is a question. That is why we just hope that Americans do not like to celebrate holidays in a bad mood and they will try to pull the quotes up. Well, maybe that's enough of a fall after all?