The stock market pared losses late Friday but still closed in the red, adding to a painful year for investors as most major indexes suffered the worst losses in 14 years.
The Nasdaq composite closed down 0.1% lower and the S&P 500 reduced its losses to 0.3%. The Dow Jones Industrial Average was down 0.2%. The small-cap Russell 2000 index fell 0.3%.
The S&P 500 Index dropped 19.44% this year. The Dow Jones Industrial Average was down 8.78%. And the Nasdaq plunged 33.10% this year. For all three indexes it was the largest one-year percentage decline since year-end 2008, the year of the Great Recession.
The Dow dipped back below its 50-day moving average. The S&P 500 and Nasdaq also remain below their 50-day lines.
Volume fell on both the Nasdaq and the NYSE vs. the same time on Thursday, early data showed.
The only one of the 11 S&P sectors to gain Friday was the S&P Energy Select Sector ETF, up 0.6%. All other sector ETFs were dropped at or less than 1%.
The yield on the benchmark 10-year Treasury note rose 5 basis points to 3.88%. Crude oil prices rose 2.6% to $80.47 per barrel.
Stock Market Falls And Could Have A Tough 2023
Stock market bulls have a "narrow path" to victory in 2023 if inflation comes down faster than expected, Ed Yardeni, founder of his namesake research firm, told Bloomberg TV and Radio. "(The stock market bulls) almost can't win," said Yardeni. "I think this time around it signals falling inflation. It doesn't necessarily imply that a recession is coming."
December's Chicago purchasing managers' index came in at 44.9 vs. the 41.0 expected, higher than November's 37.2. The PMI measures overall economic activity in the Chicago area, and is considered a bellwether for the overall economy. A reading below 50 points to contraction in business activity while a reading above 50 shows expansion.
Look to next week for key economic data, including the ISM manufacturing report and job-opening numbers on Wednesday. They should provide color on the manufacturing and labor markets. The minutes for the December Fed meeting will also be released on Wednesday, but no surprises are expected.
Odds for a 25-basis-point hike by the U.S. Federal Reserve at the February meeting stand at 69.7%. That would take the fed funds rate to the 4.5%-4.75% range. Meanwhile, 30.3% of market watchers are looking for a 50-basis-point hike, according to the CME Group FedWatch Tool.
Amazon.com pared earlier losses but still closed 0.2% lower, taking its one-month loss to more than 12%. Amazon.com hit a new 52-week low this week and its lowest level since March 2020, in the depths of the pandemic. Historically speaking, Amazon is one of seven widely held stocks to beat the S&P 500 in Santa Claus rallies in previous years.
Tesla remains near its lowest level in more than two years, although it did gain 1.1% Friday. The stock will book its worst year on record, down 65%. The brutal drop marks just the second annual loss since 2010, when it came public.
Chinese broker Futu Holdings plunged 31% after China's securities regulator said the firm illegally allowed customers on the Chinese mainland to make cross-border trades.
Offshore driller Tidewater broke out past the 36.60 buy point of a cup base, adding 1.9%. But volume faded. Tidewater's relative strength line hit a new high as indicated by the blue dot on the MarketSmith chart. But a weak market makes any stock purchase extra risky right now.
Stock Market Movers And Shakers
The Innovator IBD 50 ETF shed 0.1%, led lower by Shift4 Payments and Medpace.
The strongest performer among the IBD 50 on Friday was building products maker Griffon, which gained 2.8% and was extended past its buy point of 33.63 from a cup with handle.
Meanwhile, IT outsourcing firm Genpact is forming a cup base and is trading above its 50-day and 200-day moving averages. Genpact has an 87 Composite Rating and a strong and rising Relative Strength Rating of 77.
Meta Platforms gained 0.1% but is down 64% for the year. The Facebook parent continues to invest heavily in developing the metaverse as online advertising revenue has plateaued.
Canadian communications provider Shaw Communications rose over 9% after the Canadian Competition Tribunal approved the sale of Freedom Mobile. This should clear the decks for Shaw's proposed merger with Rogers Communications. Shares of RCI were up 4% on the news.
Merck gained 0.1% on news that China approved the molnupiravir antiviral for emergency use in Covid-19 treatment.
Follow Michael Molinski on Twitter @IMmolinski
