NEW YORK: Wall Street stocks fell on Wednesday (Dec 28) as markets weighed the odds for further equity losses as end of the “bear market” of 2022 comes into view.
After a positive start to the day, US indices slid into the red, adding to losses later in the day amid light holiday-season trading volumes.
Analysts also cited end-of-the-year selling by investors who look to record a loss for tax purposes.
“We are in a bear market,” said Adam Sarhan of 50 Park Investment. “The good news is the market valuation has gone down significantly over the last six to 12 months and that sets the stage for the next bull market.
“However there is still a lot more value compression that can occur before we get to the end of this bear market.”
The Dow Jones Industrial Average fell 365.85 points, or 1.1%, to 32,875.71; the S&P 500 lost 46.03 points, or 1.20%, at 3,783.22; and the Nasdaq Composite dropped 139.94 points, or 1.35%, to 10,213.29.
The Nasdaq Composite’s close was its lowest since the bear market began in November 2021 after the index hit a record high. The last time the Nasdaq ended lower was in July 2020. Its previous closing low for 2022 was 10,321.388 on Oct. 14.
Losses were broad-based, but large technology shares suffered more than others. Apple dropped 3.1%, Netflix 2.6% and Google parent Alphabet 1.7%.
Southwest Airlines dropped another 5.2%, adding to Tuesday’s rout as the US carrier reels from operational problems following a bad winter storm.
US-traded Chinese stocks fell amid worries over the spread of Covid-19 in China after it pivoted away from strict safety protocols.
Alibaba dropped 3% while JD.com and Baidu both lost more than 4%.
Shares of Tesla Inc gained 3.3% in choppy trade, a day after hitting the lowest level in more than two years. The stock is down nearly 69% for the year.
“There was no Santa rally this year. The Grinch showed up this December for investors,” said Greg Bassuk, chief executive at AXS Investments in Port Chester, New York.
December is typically a strong month for equities, with a rally in the week after Christmas. The S&P 500 index has posted only 18 Decembers with losses since 1950, Truist Advisory Services data show.
“Normally a Santa Claus Rally is sparked by hopes of factors that will drive economic and market growth,” Bassuk said. “The negative and mixed economic data, greater concerns around Covid re-emergence and ongoing geopolitical tensions and ... all of that also translating Fed policy is all impeding Santa (from) showing up at the end of this year.” – AFP, Reuters