Stocks Climb as Year-End Approaches
Trading is light in the final days of the year, potentially enabling outsize market moves
Caitlin Ostroff
Updated Dec. 29, 2022 at 11:28 am ET
U.S. stocks rose Thursday, as investors continued to assess the state of the U.S. economy, and what China’s reopening could mean for global growth and inflation.
With just two trading sessions left in 2022, many investors are likely to end the year nursing heavy losses. As of Wednesday’s close, the Dow industrials, S&P 500 and Nasdaq Composite were down about 9.5%, 21% and 35%, respectively, so far this year.
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In the last days of the year, investors are also considering what China’s shift away from a zero-tolerance approach to Covid-19 means for markets. On one hand, the resumption of travel in and out of China could add a boost to the global economy as growth slows.
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On the other, investors worry that rising demand could boost prices for energy and other commodities, propelling central bankers to raise interest rates further to curb inflation. The spread of Covid-19 in the country could also curb production, disrupting supply chains.
“This is why we have this hot and cold market reaction,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The end of year also brings a sense of déjà vu. The U.S. is concerned that the rapid spread in China of the virus that causes Covid-19 could increase the potential for new variants. Federal officials said the U.S. will require travelers from China to submit a negative Covid-19 test beginning Jan. 5.
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“We don’t know what’s going to happen with this new wave coming,” Ms. Ozkardeskaya said. “We have the Covid-19 stress coming back at the end of the year.”
As year-end approaches, many investors are likely sitting on large losses.Photo: Michael M. Santiago/Getty Images
Many traders are off this week as well. That means markets can see outsize moves from fewer trades, heightening volatility, although so far price action has been subdued.
In the latest read on the health of the U.S. economy, figures released Thursday showed the number of workers filing for unemployment benefits in the week ended Dec. 24 stood at 225,000, up slightly from 216,000 the week prior.
In energy markets, Brent crude, the international benchmark for oil prices, fell 2% to $82.30 a barrel.
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In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 3.872% from 3.886% Wednesday. Yields and prices move inversely.
The WSJ Dollar Index, which measures the greenback against a basket of currencies, fell 0.4%. The greenback is set for its biggest yearly rise since 2014, but investors are optimistic that the dollar’s strength has now run its course.
Overseas, the pan-continental Stoxx Europe 600 edged up 0.3%. Major indexes in Asia closed with losses. South Korea’s Kospi dropped 1.9%, while Japan’s Nikkei 225 declined 0.9%. Hong Kong’s Hang Seng fell 0.8%, and China’s Shanghai Composite edged down 0.4%.
Write to Caitlin Ostroff at
caitlin.ostroff@wsj.com