Tuesday, January 3rd, 2023

Happy New Year! Don’t look now, but we still have two trading days left of our “Santa Claus Rally”! In this initial pre-market session of 2023, the Dow is +110 points at this hour, the S&P 500 is +15 and the Nasdaq is +60 points. This is down notably from the +230 on the Dow, etc. we were seeing in the very early hours, but starting off the new year with a bang!

OK, jokes aside, we’re trading again after the worst year for the markets since 2008. The good news here is a lot of the downward pressures have already given the indices a good squeeze and are slimmer to start a new year (compared with — ahem! — many of our post-holiday physiques). Off the early 2022/late 2021 all-time market highs, the Dow is -10.3%, the S&P is -20.3% and the tech-heavy Nasdaq -35.4%.

We did see a stronger Q4 overall, with the Dow posting its best quarter in more than two years, +15.4%, the S&P +7.1% and the Nasdaq “only” down -1% for the quarter just past. Yet an actual Santa Claus Rally never did materialize; perhaps investors had had enough of 2022’s head-fakes over the course of the year, and weren’t buying it this time around.

This is fine, actually: starting a new year at lower levels allows for yearly gains easier than starting at all-time highs, as we saw at the start of last year. And we’re still only discussing things we can see on the horizon; 2022 brought us plenty of unwelcome surprises, such as Russia’s invasion of Ukraine and China’s continued struggles with its “Zero-Covid” policy. Hong Kong’s Hang Seng index dropped -15.5% in ’22 — its worst showing in 11 years.

After today’s open, we’ll be looking for two economic reports, both of which are expected to continue their downward trajectories. The final print for U.S. Manufacturing PMI from the S&P in December was 46.2 a month ago, and anything below 50 demonstrates contraction, not expansion. Construction Spending for November is expected to come down -0.4% from -0.3% the previous month.

This week, while holiday-shortened, will be rife with economic data points. We’re starting off slow, but pick up steam tomorrow and Thursday, and culminating withe the monthly nonfarm payroll report for December from the U.S. Bureau of Labor Statistics (BLS). It’s expected that 180K jobs will have been created last month — the first time the BLS would have put up a sub-200K headline all year. The Unemployment Rate was steady at 3.7%.

Questions or comments about this article and/or its author? Click here>>

Just Released: Zacks Top 10 Stocks for 2024

Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.

See New Top 10 Stocks >>