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Wall Street’s main indexes ended 2022 with their steepest annual losses since 2008, against the backdrop of the U.S. central bank’s fastest pace of rate hikes since the 1980s.
The benchmark S&P 500 shed 19.4% in 2022, marking a roughly $8 trillion decline in market cap, while the tech-heavy Nasdaq fell 33.1%.
As investors return from the New Year holidays, focus is now on the likelihood of a recession following aggressive monetary policy tightening.
The head of the International Monetary Fund has also cautioned that 2023 is poised to be a tough year as the United States, Europe and China all experience weakening economic activity.
Investors will closely monitor the minutes of the Fed’s December policy meeting, when the central bank raised interest rates by 50 basis points after four straight 75-basis point increases and signaled rates could stay higher for a while.
The minutes are due to be released on Wednesday.
“What is really going to be very important for U.S. stocks this week is going to be FOMC minutes, which will probably reconfirm how serious the Fed is about fighting inflation,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.
Economic data due this week includes December’s nonfarm payrolls report as well as manufacturing data, which will give further clues on the strength of the economy and the labor market.
Money market participants see a 68.8% chance the central bank will raise the benchmark rate by 25 basis points to 4.50%-4.75% in February, with the rates peaking at 4.94% by June.
At 5:56 a.m. ET, Dow e-minis were up 298 points, or 0.90%, S&P 500 e-minis were up 38.5 points, or 1.00%, and Nasdaq 100 e-minis were up 129.75 points, or 1.18%.
Tesla (NASDAQ:TSLA) Inc fell 2.6% in premarket trading as the electric-vehicle maker missed Wall Street estimates on deliveries for the fourth quarter of 2022.
