Bloomberg January 3, 2022
U.S. equities climbed to a record while Treasuries extended losses as traders braced for the start of a potentially volatile year and three expected rate hikes from the Federal Reserve.
The S&P 500 rose 0.6%, following stocks in Europe to an all-time high, as trading volume remained light with some markets still closed for holidays. The yield on the U.S. 10-year note rose 13 basis points to 1.64% — its worst start to a year since 2009 — and the dollar gained.
“Bottom line, the outlook is positive for stocks, but the removal of stimulus/accommodation from the global economy is a major theme to watch as we start 2022,” wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. “It’ll be the first time since 2018 that the Fed is hiking rates, and that change will impact markets throughout the year.”
Among notable stock moves, Tesla Inc. climbed 14% as the carmaker navigated supply-chain disruptions to report blowout deliveries for the fourth quarter. Apple Inc. gained, giving it a $3 trillion market value. And in Hong Kong, property shares dropped while China Evergrande Group halted trading.
As we flip the calendar over, many of the current market concerns are well known and arguably well priced in at both the index and more prominently at the average stock level,” wrote Art Hogan, chief markets strategist at National Securities. “We suggest markets have done an overly efficient job in selling the rumor, and will likely start buying the news.”
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