U.S. stock indexes were trading mixed Friday afternoon, with the S&P 500 struggling for direction in the final trading day of 2021, as risk appetite waned on New Year’s Eve.
With most European markets closed or shutting down early on Friday, trading was pegged to be thin in U.S. markets too, as investors close out a good year for global equities with economies recovering from the global pandemic.
How are stock benchmarks trading?
- The Dow Jones Industrial Average DJIA, +0.10% was up almost 49 points, or 0.1%, at around 36,446.
- The S&P 500 SPX, +0.01% was up about one point, trading roughly flat near 4,780.
- The Nasdaq Composite Index COMP, -0.31% was down 37 points, or 0.2%, at almost 15,704.
On Thursday, the Dow closed down 90.55 points, or 0.3%, to 36,398.08, the S&P 500 index fell 14.33 points, or 0.3%, to close at 4,778.73, the Nasdaq Composite Index declined 24.65 points to 15,741.56, a 0.2% loss.
For the week, the Dow is heading for a 1.4% gain, while the S&P 500 index is poised to rise 1.1% and the Nasdaq is on pace to advance 0.3%. For December, the Dow is on track to log a 5.7% gain, while the S&P 500 is on its way to a 4.7% rise and the Nasdaq is poised to add 1%.
For 2021, the S&P 500 index is on track to gain around 27%. That compares with a potential rise of almost 22% for the technology-heavy Nasdaq and a 2021 gain of around 19% for the Dow as the stock market neared its close on New Year’s Eve.
What’s driving the market?
It is the final trading session of the week, month, quarter and year, which is one reason that Wall Street is open on New Year’s Eve and will see regular trading hours as market participants close out their trading logs.
“Today should be a relatively quiet day,” said Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors, in a phone interview Friday. Trading is thin, he said, with “more market movements” potentially coming toward the end of the day as investors close out their positions for the year.
Thinner holiday volumes could result in some choppiness in the action in the final session of 2021, following a strong start to the past week of December, as investors assess the path ahead for markets, a path that has been colored by a global pandemic that has lasted about two years, so far.
Despite recent dips, both the Dow and the S&P 500 posted record-high closes this week, with the rise for equities supported by the belief that disruptions from the omicron variant that causes COVID-19 won’t be lasting.
The seven-day average of COVID-19 cases in the U.S. has risen at a parabolic pace to 344,543 on Thursday, up from 301,477 on Wednesday, which is up about fourfold since Dec. 1 and 37% above the January 2021 daily peak of 251,232, according to a New York Times tracker. Hospitalizations also kept climbing, but at a slower pace, as the daily average reached 81,847 on Thursday.
Airlines canceled hundreds of flights Thursday because of labor shortages after thousands were scrubbed during the Christmas weekend, while the Federal Aviation Administration warned of possible delays tied to the virus at the agency. Also, the Centers for Disease Control and Prevention has recommended that Americans avoid taking cruises, whether they are vaccinated or not.
JPMorgan Chase & Co. is one prominent bank that has offered its employees the option of working from home to start 2022. The money-center bank run by Jamie Dimon is “allowing for more flexibility during the first two weeks of January to work from home (if your role allows) at your manager’s discretion,” Bloomberg reported, citing a Thursday memo to employees.
However, in South Africa, where the omicron variant of COVID was first identified, the government said the country’s latest viral wave had subsided and it would be easing restrictions. In the U.S., while daily COVID cases soared to a record high, the Centers for Disease Control and Prevention said that relatively few people are being hospitalized or dying as a result of omicron. And White House medical expert Anthony Fauci has said that he is expecting the omicron outbreak to peak by the end of January.
There is no U.S. economic data scheduled for release due to the New Year’s Eve holiday and the bond market closed an hour earlier at 2 p.m. Eastern Time on Friday.
The U.S. stock market’s strong performance in 2021 has been driven by corporate earnings growth, said State Street’s Bartolini, with the S&P 500 index poised for a third straight year of double-digit gains.
“I think everyone just kinda wants to close out the year on a good note,” he said. “Market returns aside, it’s been quite a turbulent year.”
Which companies are in focus?
- Advanced Micro Devices Inc. AMD said Thursday that its acquisition of fellow semiconductor company Xilinx Inc. XLNX would not close by the end of 2021, but did say it expects the deal to be sealed early in the new year. Shares of AMD slipped 0.5% while Xilinx’s stock was down 1.2%.
- Shares of Zepp Health Corp. ZEPP were little changed, after the China-based smart health technology company cut its fourth-quarter revenue outlook, citing a “greater than anticipated effects of COVID” and a more persistent global shortage of semiconductors.
- The U.K. Medicines and Healthcare products Regulatory Agency said it has approved Pfizer’s PFE Paxlovid oral antiviral for people with mild to moderate COVID-19 and have at least one risk factor for developing severe illness. Shares of Pfizer were up 2%.
How are other assets faring?
- The yield on the 10-year Treasury note TMUBMUSD10Y was trading around 1.496%, marking its biggest yearly yield climb since 2013.
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.4%.
- Oil futures fell, with West Texas Intermediate crude for February delivery CL00 declining 2.3% to settle at $75.21 a barrel. WTI rose 55% in 2021, its largely annual gain in 12 years.
- Gold futures GC00 for February delivery GCG22 rose 0.8% to settle at $1,828.60 an ounce Friday. The precious metal fell 3.6% in 2021.
- Bitcoin BTCUSD was down around 2.2% at $46,179.
- The FTSE 100 UKX, -0.25% fell about 0.2% Friday, but ended the year with gains of 14.3%. The Stoxx Europe 600 SXXP, -0.19% declined 0.2% Friday and posted gains of around 22.2% for 2021.
- In Asian trade, the Shanghai Composite SHCOMP ended 0.6% higher Friday, logging a 4.8% gain for the year. The Hang Seng Index HSI climbed 1.2% Friday, but remained down 14.1% for the year. China’s CSI 300 000300 booked a 0.4% advance Friday, but lost 5.2% for the year. The NIKKEI 225 index gained 4.9% in 2021, with Japan’s market closed on Friday.