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Stock futures edge lower as Wall Street awaits final trading day of 2022

Stock futures edged lower in premarket trading Friday as investors braced for the final trading day of the worst year for stocks since 2008.

Futures tied to the Dow Jones Industrial Average slipped 111 points, or 0.3%. S&P 500 and Nasdaq 100 futures traded lower by 0.4% and nearly 0.6%, respectively.

The overnight moves followed a rally Thursday, with the Nasdaq Composite and S&P 500 climbing about 2.6% and roughly 1.8%, respectively. The Dow jumped 345 points, or 1.05%.

For the week, the Dow and S&P are slightly higher, with the Nasdaq on track for a modest loss. All major averages are lower for December and are poised to snap a two-month win streak.

Friday marks the final day of trading of what’s been a painful year for stocks. A volatile bear market, sticky inflation, and aggressive rate hikes from the Federal Reserve battered growth and technology stocks. These factors also weighed on investor sentiment.

All three of the major averages are marching toward their worst year since 2008, slated to snap a three-year win streak. The Dow fared the best of the indexes in 2022, down 8.58%, while the S&P and tech-heavy Nasdaq tumbled 19.24% and 33.03%, respectively.

Despite the yearly losses, the Dow is on pace for a 15.65% quarterly gain and is primed to snap a three-quarter losing streak. It’s also headed for its best quarter since the second quarter of 2020. The S&P is up 7.35% and slated to break three consecutive quarterly losses. The Nasdaq’s slipped 0.92%, for its fourth consecutive negative quarter for the first time since 2001.

All major S&P sectors finished Thursday with gains, led to the upside by communication services. For the quarter, consumer discretionary and communication services are the only sectors headed for losses. Energy is the only sector on pace for yearly gains after surging nearly 58%.

Communication services stocks in the S&P 500 are down more than 40% on the year and consumer discretionary has fallen 37.4%, while energy, the large-cap index’s only positive sector, has soared nearly 58%.

As the calendar year turns the corner, some investors think the pain is far from over, and expect the bear market to persist until a recession hits or the Fed pivots. Some also project stocks will hit new lows. Thursday’s moves likely stemmed from a combination of short covering, value investing and momentum traders joining the rally, said Adam Sarhan, CEO of 50 Park Investments.

“Nothing fundamentally has changed,” he said. “We just had a huge drop. The market’s extended to the downside, and it’s perfectly normal to see a bounce here.”

On the economic front, Chicago PMI data for December is due out Friday. Next week will see a slightly more active slate for economic data, highlighted by the nonfarm payrolls report set for Jan. 6. Financial markets are closed Monday in observance of the New Year’s Day holiday.

— Gabriel Cortes contributed reporting

Correction: A chart in this story has been updated to reflect the correct year-to-date decline for the Dow Jones Industrial Average.

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