Money

S&P 500 closes lower, Nasdaq sheds 1% as bond yields pop

S&P 500 and Nasdaq finish lower

Stocks were mixed Tuesday.

The Dow Jones Industrial Average rose 37.63 points, or 0.11%, to finish at 33,241.56. The S&P 500 fell 0.4% to settle at 3,829.25, while the Nasdaq Composite shed 1.38% to end at 10,353.23.

— Samantha Subin

Current bear market follows historical trends, Glenmede’s Michael Reynolds says

The current market is performing in line with how bear markets typically have in the past, according to Michael Reynolds, vice president of investment strategy at Glenmede.

He said the average bear market since World War II has lasted 14 months. And the market usually sees 35.7% drop from the pre-bear high.

“The current market appears to be following a similar trajectory of an average historical bear market so far,” Reynolds said.

Reynolds pointed to the S&P 500 ending last week down 0.2%. It was about 7% off its late-November high, which he said can be taken to mean the end of “yet another bear market rally.”

He said investors should consider staying underweight on risk assets considering there may be further slides.

— Alex Harring

SPAC liquidation picks up in December as time runs out for firms to complete mergers

Some 74 SPAC deals have liquidated in December, according to SPAC Research, as the blank-check companies wrap up a difficult year in an ugly market.

Year to date, a total of 128 special purpose acquisition companies have liquidated, compared to one SPAC liquidation in all of 2021, SPAC Research found.

SPACs have faced a rough 2022. These companies typically pool funding to identify and finance an acquisition of a smaller company and bring it public within a particular time frame.

Investors have become increasingly risk averse amid this year’s market tumult, curtailing the appetite for SPACs. The liquidations arrive as many of these companies reach the end of the time allotted for them to identify a target and merge with it. More than 600 SPACs priced in 2021, driving this year’s spike in liquidations.

Major names that have liquidated in December include Brad Gerstner’s Altimeter Growth 2. Crypto firm Bullish and Far Peak Acquisition also called off their merger this month.

Darla Mercado, Gina Francolla

Much heralded Santa Claus Rally net gain since 2000? Try 0.76%

The folks at Birinyi Associates on Tuesday needed to play Scrooge and throw cold water on the idea that a Santa Claus Rally is an investment approach that has proven profitable in the past generation.

Their conclusion? The Santa Claus Rally is a myth, at least as shown in data going back to 2000.

In only two years (2001 — almost +6%, and 2009 — more than +7%) would investors have seen an appreciable return during that supposed, sure-thing, can’t miss stretch starting at Christmas and running through the first two trading days of the following year.

The average gain since 2000? 0.76%.

“In effect if you buy JPM at $130 you should according to the SCR yield 98 cents…Making 98 cents on a $130 investment does not strike us as a good investment policy or approach,” the note from Birinyi’s Joshua Rubin said.

— Scott Schnipper

Tesla on pace for worst month, quarter and year

The selloff in Tesla shares continued Tuesday, putting the electric vehicle stock on pace for its worst month, quarter and year on record.

For December, the stock’s down more than 42%. The stock’s also slumped more than 57% since the start of the quarter and almost 68% in 2022.

The drop in shares follows a report from the Wall Street Journal saying that the electric vehicle maker will extend a week-long production halt at its Shanghai facility as Covid cases mount. Shares have also taken a beating this year amid CEO Elon Musk’s takeover of Twitter.

The stock also sits more than 70% from its November 2021 high.

— Samantha Subin, Rohan Goswami

Apple trades near June 2021 lows, but some believe the best is ahead for the stock

Shares of Apple shed 1.5% on Tuesday to trade near lows not seen since June 2021. But despite the slump in shares, some strategists and analysts say better times are ahead for the technology company.

Apple’s stock has tumbled nearly 27% this year as growth suffered in a rising rate environment. The company also grappled with supply disruptions fueled by factory shutdowns at its largest supplier in China, just beginning to subside.

Production hiccups have subsided, demand remains strong and supply chain issues should ease by the middle of next month, Rosenblatt’s Barton Crockett told CNBC’s “Squawk on the Street” on Tuesday. That should bode well for Apple in the new year and its stock.

“I think Apple is well positioned for a good recovery,” he said.

Crockett isn’t alone. Citi analyst Jim Suva named six catalysts for the stock in the new year.

Despite a challenging December quarter, he expects Apple to trade higher as it benefits from potential growth in India, sustained revenue growth, and a boost in services revenues. The launch of the iPhone maker’s augmented and virtual reality headset, and buybacks, or a flight to quality, could also lift shares.

“We think 2023 becomes a much better year, especially after people recalibrate to this higher interest rate environment that we’re living in,” he told CNBC’s “The Exchange” on Tuesday.

— Samantha Subin

Gold price hits six-month high

The price of gold traded at a high not seen in six months as investor excitement around the latest Chinese reopening news grew.

Spot gold rose 1.1% to $1,817.25 per ounce. Earlier in the session, it hit $1,832.99, which is the highest price its traded at since June 27.

The metal got upward pressure from the news that China would stop requiring quarantine for international travelers starting Jan. 8.

Gold futures gained 1.3% to trade at $1,828.10.

— Alex Harring

Energy, industrials outperform in the S&P 500, consumer discretionary lags

Energy and industrials were the two leading sectors in the S&P 500 during Tuesday trading, up about 1.4% and 0.5%, respectively.

Energy stocks surged, helped by advances in shares of Pioneer Natural Resources, Hess and Devon Energy. Industrial stocks got a boost from gains in engine manufacturer Cummins and construction equipment maker Caterpillar.

Meanwhile, consumer discretionary stocks underperformed, down nearly 1.2% as recession concerns weighed on next year’s outlook. Shares of Tesla dragged on the sector, down about 8%.

— Sarah Min

Treasury yields climb

Bonds yields climbed Tuesday, putting pressure on growth stocks like technology.

The yield on the 10-year Treasury note was last up by 11 basis points at 3.854%. The 2-year Treasury yield rose 8 basis points to last trade at 4.402%.

Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.

The tech-heavy Nasdaq Composite, which is more susceptible to moves in rates, last traded 1.2% lower.

— Samantha Subin

Stocks making the biggest moves midday

These are some of the stocks making the biggest mid-day moves:

  • Southwest — Shares dropped more than 4% after the company canceled 70% of its scheduled flights and warned that mass disruptions would continue “for the next several days.”
  • Las Vegas Sands, Wynn Resorts — The casino stocks rose 3.8% and 5%, respectively, following China’s announcement that it will end quarantine for international travelers starting Jan. 8.
  • Nio — Shares slid 9.8% after the electric-vehicle maker lowered its fourth-quarter delivery outlook, citing supply chain disruptions in China.

See the full list here.

— Alex Harring

Wynn Resorts and Las Vegas Sands lead the S&P 500

Oil hits three-week high as investors cheer China’s quarantine changes

Oil prices reached a three-week high as investors hedged hopes of demand recovering on the latest news of China’s Covid restrictions easing.

Brent crude gained $1.55, or 1.9%, to $85.47 a barrel. U.S. West Texas Intermediate crude added $1.37, or 1.7%, to $80.93. 

Both hit highs not seen since Dec. 5 earlier in the trading day. China’s National Health Commission said Monday it would stop requiring travelers coming into the country to quarantine, a move viewed by investors as a key step in rolling back the Covid restrictions that have hampered global supply chains and travel.

These S&P 500 stocks are beating the index and up at least 20% this quarter

The S&P 500 is slated for losses in 2022, but the benchmark index is still up more than 7% quarter to date and headed for its first positive period since the fourth quarter of last year.

Here are some of the stocks beating the benchmark this year, and slated to post gains for December and 2022. These stocks are also up at least 20% for the quarter.

  • Universal Health
  • Halliburton
  • Caterpillar
  • Baker Hughes
  • APA
  • Arch Capital
  • Air Products and Chemicals
  • United Rentals
  • Merck
  • SolarEdge
  • PG&E
  • Aflac
  • Omnicom
  • Las Vegas Sands
  • Philip Morris
  • Kraft Heinz
  • Campbell Soup
  • Raytheon
  • Chubb

— Samantha Subin, Gina Francolla

International and emerging market stocks seen returning most over next 7 years, GMO says

International stocks, but especially emerging market stocks — and most notably emerging market value stocks — offer the greatest likelihood of outperforming large and small stocks in the U.S. over the next seven years, even after adjusting for inflation, according to the latest monthly projection from Grantham Mayo Van Otterloo & Co.

Emerging market value stocks are likely to return a real 9% per annum over the next seven years, while emerging market stocks as a whole are forecast to return 5.2% a year. International small-cap stocks are projected to return a real 4.5% while international large-cap stocks come in at 2.4% a year, after inflation.

The U.S. isn’t forecast to keep up, with U.S. small caps projected to shrink 1.4% each year after inflation, and U.S. large caps estimated to fall an average 1.8% annually over seven years.

Similarly, emerging market debt is likely to end up as the best-performing fixed-income class, returning a real 3.5% annually, followed by U.S. cash at +0.8%, U.S. inflation-linked bonds at 0.3%. International bonds hedged against currency exposure are forecast to lose 1.8% a year and U.S. bonds to return -0.3%.

As stocks floundered in 2022, valuations improved and the outlook for future returns has brightened. At the start of 2022, GMO pegged emerging market value stocks to return +5% annually over seven years, emerging market stocks +2.2%, international small caps -1.2%, international large caps -2.5%, U.S. small caps -6.5% and U.S. large caps -7.3%.

U.S. cash was projected to lose the least amount of money at the start of the year, falling 1.1% a year after inflation looking out over the next seven years, followed by emerging market debt at -1.7%, U.S. inflation-linked bonds (-3.7%), U.S. bonds (-4.1%) and currency-hedged international bonds (-4.7%).

— Scott Schnipper

Texas business activity falls further into contraction, Fed survey shows

Business activity in Texas contracted more than expected in December, weighed by slowdowns in new orders, the Dallas Federal Reserve reported Tuesday.

The general business activity index in the Dallas Fed’s monthly manufacturing survey posted a reading of -18.8, worse than the -14.4 November reading and below the -15 Dow Jones estimate. The index measures the percentage of firms reporting expansion against contraction.

New orders and growth rate of new orders remained mired in negative territory, with respective readings of -9.2 and -9.3, though both were better than November. The biggest month-over-month negative change came in capital expenditures, which posted a -2.1, good for an 11.4-point decline.

On the positive side, the overall production index registered a 9.7, after being slightly positive in November.

—Jeff Cox

Apple, Tesla trading at 52-week lows

Tech shares slid as bond yields ticked higher on Tuesday, with Tesla shares slumping more than 6% to fall to a fresh 52-week low of $114.12. The stock is trading at levels not seen since Sept. 2020.

Apple slipped more than 1% to reach a new low of $128.72, slumping to levels last seen in June 2021.

Lumen Technologies, meanwhile, fell to lows dating back to 2008 – when the CenturyTel/Embarq merger created CenturyLink, the name Lumen was known as until 2020.

A handful of companies also reached fresh 52-week highs.

J.M. Smucker is trading at all-time highs dating back to its debut on the public markets in 1959. Merck shares are trading at all-time highs dating to 1978. Specialty insurer Arch Capital Group is at levels dating back to 2000 when its shares began trading on the Nasdaq.

Lamb Weston is trading at levels last seen in February 2020, and Caterpillar is trading at levels not seen since June 2021.

Darla Mercado, Chris Hayes

Odds favor an up year for markets in 2023, says Carson Group’s Detrick

Inflation and other economic concerns will linger in 2023, but don’t expect another down year, according to Carson Group’s Ryan Detrick.

“We just don’t see two down years in a row with some of these positives that are still out there,” the chief market strategist told CNBC’s “Squawk Box” on Tuesday.

Since 1928, there have only been four instances where the S&P 500 has fallen for two consecutive years in a row. That included the tech bubble in the early 2000s.

While inflation remains high and fears of a recession linger, Detrick is optimistic about 2023. Data shows that when inflation is lower the next year, on average, the S&P rises 13%. Even if inflation is higher, the index rises about 6% on average.

“We probably could avoid to down years in a row and it’s history saying maybe next year could be actually a little bit better than most people think,” he said.

— Samantha Subin

Big Tech stocks struggle in morning trading

The Nasdaq Composite has fallen more than 1% in early trading, weighed down by some of the biggest names in the index.

Shares of Apple dropped 2.1%, while Amazon shed 1.8%. Microsoft, Meta Platforms and Salesforce also suffered modest dips.

Meanwhile, electric vehicle giant Tesla sank more than 6% after reports that it had paused production in China.

— Jesse Pound

Home prices fall in October

Home prices fell in October for the fourth straight month, according to the latest S&P Case-Shiller index tracking the U.S. housing market.

Year over year, the index was up 9.2% in October, coming in below expectations of a 10.4% increase, according to Dow Jones. Home prices fell 0.5% over September.

“As the Fed tightens financial conditions, the housing market will likely slow further in the coming year,” said Jeffrey Roach, chief economist at LPL Financial. “However, low inventory of homes available for sale should soften the impact from rising rates and insulate the residential market from a redux of the Great Financial Crisis.”

— Samantha Subin

Stocks open flat

Stocks opened flat as the final trading week of 2022 began.

The Dow Jones Industrial Average last traded 20 points higher, or 0.05%. The S&P 500 traded flat, while the Nasdaq Composite shed 0.46%.

— Samantha Subin

S&P 500 on pace for seventh most negative year since 1928

The S&P 500 is headed for its seventh most negative year dating back to 1928.

Since 1928, there have been only 20 years where the benchmark index finished down more than 10%.

Both 2008 and 2002 saw worse losses, with the S&P falling more than 23% and 38%, respectively. Data shows that 1931 was the worst year since 1928 for the index, which fell about 47%.

— Samantha Subin, Gina Francolla

Southwest slumps amid flight cancellations

China-linked stocks rise as country eases restrictions

Shares of China-based companies trading on U.S. exchanges rose in the premarket as the country eases Covid restrictions. China announced it plans to lift quarantine requirements for travelers beginning Jan. 8.

Shares of Alibaba gained 1.5%, while JD.com and Pinduoduo rose more than 2% each.

China ETFs also gained, with the KraneShares CSI China Internet ETF up 2.7% in the premarket, on pace for its first gain in three sessions. iShares China Large-Cap and iShares China Large-Cap added 2% each.

The news also lifted Macau-linked casino stocks in the premarket. Las Vegas Sands was last up 1.4%, while Wynn and Melco Resorts rose 2.5% and 4.2%, respectively.

— Samantha Subin

Tesla falls on extended production suspension

Tesla shares slumped more than 5% before the bell following reports over the weekend saying that the company’s extending a production halt at its factory in Shanghai.

The production cut extends a previously planned production pause and comes as the company faces a resurgence in Covid cases among its workers.

— Samantha Subin

European markets advance as upbeat sentiment continues

European stocks moved higher on Tuesday as positive sentiment continues in the final trading days of 2022.

Germany’s DAX climbed by around 0.8% in early trade, while France’s CAC 40 was up around 0.9% and Italy’s FTSE MIB around 0.7%. The U.K.’s FTSE index is closed Tuesday for a public holiday.

Sector-wise, autos and chemicals both added 1.6% to lead gains as most sectors traded in positive territory.

Stocks in Europe received a boost from their counterparts in Asia-Pacific after China officially announced overnight that it will end quarantine for inbound travelers on Jan. 8 — symbolizing an end to the zero-Covid policy that it has held for nearly three years.

– Elliot Smith

Here are where the major averages stand heading into the final trading week

Stocks are on pace to close out their worst year since 2008 as investors head into the final trading week of 2022. Here are where they stand.

Dow Jones Industrial Average

  • The Dow is down -4.01% month to date, on pace to break a 2-month win streak.
  • The Dow is down -8.63% year to date, on pace to break a 3-year win streak with its worst yearly performance since 2008 when it fell -33.84%.

S&P 500

  • The S&P is down -5.77% month to date, on pace to break a 2-month win streak.
  • The S&P is down -19.33% year to date, on pace to break a 3-year win streak with its worst yearly performance since 2008 when it fell -38.49%.

Nasdaq Composite

  • The NASDAQ is down -8.46% month to date, on pace to break a 2-month win streak.
  • The NASDAQ is down -32.90% year to date, on pace to break a 3-year win streak with its worst yearly performance since 2008 when it fell -40.54%.     

— Sarah Min, Chris Hayes

Stock futures open higher

U.S. stock futures rose on Monday night as investors headed into the final trading days of 2022, deliberating whether a Santa Claus rally will appear and lift a market that has been weighed down by recession fears.

Dow Jones Industrial Average futures rose by 110 points, or 0.33%. S&P 500 and Nasdaq 100 futures advanced 0.45% and 0.58%, respectively.

— Sarah Min

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