U.S. stocks were choppy Tuesday morning as Wall Street returned from a long holiday weekend to surge through the final four sessions of 2022.
The S&P 500 (^GSPC) fell 0.2%, while the Dow Jones Industrial Average (^DJI) gained about 90 points, or 0.3%. The tech-heavy Nasdaq Composite (^IXIC) fell 0.8%.
Starting Jan. 1, China will lift quarantine requirements for incoming travelers. 8 boosted sentiment as the country expanded its reopening after three years of zero COVID containment and travel restrictions. The National Health Commission also said on Monday that the country’s management of the virus would be downgraded from the top category A to category B.
Tesla ( TSLA ) continued to fall sharply after Reuters reported that the electric car giant will reduce production plans at its Shanghai factory in January, extending production cuts that began this month into the new year. Tesla shares fell more than 6% in early trading.
Shares of Southwest Airlines (LUV) fell 6% after canceling about 2,900 flights on Monday, or 70% of its scheduled flights, compared with 48% on Sunday.
The US Department of Transportation (USDOT) called the scale of the cancellation “unacceptable” and said it would investigate whether the company was responsible.
Elsewhere in the market, the dollar index retreated as China’s easing of virus protocols spurred a retreat from safe-haven assets. U.S. Treasury yields were higher after posting their biggest rise since April last week.
Oil prices extended recent gains to hit three-week highs as the prospect of China reopening to demand fueled concerns about the impact of cold weather on U.S. output. U.S. benchmark West Texas Intermediate (WTI) crude futures rose 1% to $80 a barrel.
Friday morning’s moves helped the S&P 500 and the Dow avoid a third straight weekly decline. The index rose 0.6 percent and 0.5 percent, respectively. The Nasdaq also closed higher on Friday, but fell 1.5% for the week.
Investors had been hoping that the Santa Claus rally would provide some respite for stocks as they headed for their worst year since 2008. The phenomenon — the seasonal rise in stocks at the end of December — is usually defined as the trading days of the year and the first two trading days of the new year over the past five years. Yale Hirsch, author of the Stock Trader’s Almanac, discovered this pattern in 1972.
A brutal December marked by interest rate and recession fears kept selling pressure high throughout the month and dampened hopes for a typical year-end rally. But stocks are set to continue their gains in the shortened trading week as Friday’s close rose to mark the first day of the period.
DataTrek’s Jessica Rabe notes that after a negative calendar year of less than 10%, the S&P 500’s win percentage and overall average performance significantly outperforms indexes with higher losses — and 2022 Expect to end up in the latter.
“That said, when the index is down at double-digit rates like it is today, the chances of it going up next year are basically a coin toss, and the returns are far less bullish than when the S&P closed down by more than 10%,” Rabe said in a recent report. “If there is indeed a ‘Santa Claus rally’ this month, the S&P may end the year with no more than double-digit losses.”
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Alexandra Semenova is a reporter for Yahoo Finance.Follow her on Twitter @alexandraandnyc
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