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The S&P 500 fell on Tuesday, at the beginning of the holiday-shortened week, as yields climbed while investors are busy assessing the economic outlook for the new year.
The Dow Jones Industrial Average rose 47 points, or 0.13%. The S&P 500 retreated by 0.4%, while the Nasdaq Composite shed 1.3%. Southwest shed more than 5% as the airline canceled thousands of flights.
China-linked stocks advanced as the country eased the official Covid restrictions. Tesla shares dropped 8% on news of an extended production pause, with the stock on pace for its worst year ever.
Treasury bond yields also edged higher, putting pressure on growth stocks including technology shares. The yield on the 10-year Treasury note was last up more than 10 basis points to trade at 3.852%. Apple’s stock was the worst performer in the Dow, falling 1.6% to levels not seen since June 2021.
Tuesday has witnessed an additional scene where higher yields continue depressing growth stocks, with redistribution into other sectors that are smaller, but not big enough to change the headline index.
Stocks are headed for their worst yearly performance since 2008 and another month of losses, with the Dow and S&P off by 8.5% and 19.7%, respectively. The Nasdaq’s fallen 33.8%.
For December, the S&P has dropped 6.2% while the Dow and Nasdaq have tumbled 3.9% and 9.6%, respectively. The major averages are on pace for their biggest monthly declines since September.
After a tedious year that has been exhausted by hot inflation and recession-linked fears, investors now hope for 2023 to bring about some positive developments. Friday kicked off the period for a Santa Claus rally, which is typically considered the final five-day trading stretch in the current year, as well as the first two trading days in the new year.
