Market Review: December 27, 2022

Closing Recap

Tuesday, December 27, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     US stocks opened higher but faded as Treasury yields jump to one-month highs and investors lock in end of year tax loss selling. Selling pressure focused on the biggest sector losers on the year, with consumer discretionary, communications and technology leading Tuesday’s declines. In contrast the biggest sector winner year to date, energy (+58%) was today’s big winner followed by Industrials and Utilities. Tesla (TSLA) a market focus, hitting new 2-year lows, falling -68% YTD for the 5th worst S&P name in the index this year as end of year tax loss selling intensifies the final week of 2022. MRK, CAT hitting 52-week highs in the Dow while AAPL hits 52-week lows (along with TSLA). Overall, there was limited financial news given the final trading week of the year sandwiched between Christmas and New Year’s. Some of the market moving stories today included the being China reopening headlines which helped commodity stocks. There was a relatively dovish Nick Timiraos WSJ article talking about the aggressive housing slump in the US aiding the Fed in its battle against inflation.


Economic Data:

·     U.S. home prices declined -0.3% in October, the fourth consecutive monthly decline, according to the Case-Shiller national index – all 20 cities in the U.S. index posted monthly declines

·     U.S. October 20-metro area home prices +8.6% from year ago vs +10.4% in September—S&P CoreLogic Case-Shiller showed; October home prices in 20 metro areas -0.5% seasonally adj vs revised -1.3% in September; Oct 20-metro area home prices non-adjusted -0.8% vs -1.5% in Sept

·     Goods Trade Deficit narrowed in November to its smallest in two years after imports collapsed. The $83.3 billion deficit was massively ‘better’ than the $96.3 billion gap expected. Shrinkage in the deficit was driven a 7.6% plunge in imports $252.2 billion, the lowest in more than a year. The value of exports also dropped, down 3.1% to $168.9 billion.


Commodities, Currencies & Treasuries

·     Oil prices pulled back after hitting three-week highs of $81.18 for WTI crude, settling little changed at $79.53 per barrel. China’s latest easing of COVID-19 restrictions spurred hopes of a fuel demand recovery initially as commodity prices jumped. Natural gas prices edged higher by 4% to settle at $5.28 mln Btus following a-23% decline last week (last week high was $6.28 on 12/19 and was above $7.00 on 12/15).

·     Treasury yields jumped across the curve, as the 10-yr yield hit highs of 3.85%, up 10-bps while the 30-yr up 10-bps to 3.927% and the 2-yr up about 11bps to 4.43% (hitting 1-month highs). The US Treasury sold $42B in 2-year notes at a yield of 4.373% vs. 4.39% when issued prior, with the bid-to-cover at 2.71 vs. 2.64 prior auction and indirect bidders awarded 62.22%, directs 18.71% and primary dealers 19.07%. The US sold $39B in 1-year notes at 4.515%.

·     Gold prices hit 6-month highs of $1,841.90 an ounce before paring gains, rising $18.90 to settle at $1,823.10 an ounce as commodity prices in general got a boost as optimism surrounding decisions by top consumer China to further ease COVID-19 restrictions weighed on the dollar. Gold has gained nearly $200 after falling to a more than two-year low in late September.

·     The U.S. dollar fell after China said it would scrap its COVID-19 quarantine rule for inbound travelers – a major step in reopening its borders that boosted risk-related currencies.







WTI Crude















10-Year Note





Sector News Breakdown


·     According to Mastercard SpendingPulse data, U.S. retail sales excluding automotive increased 7.6% y/y this holiday season, running from November 1 through December 24. The data measures in-store and online retail sales across all forms of payment and is not adjusted for inflation. Online sales grew 10.6% compared to the same period last year

·     MLCO, WYNN, LVS and other casinos in the Macau region rally after China will stop requiring inbound travelers to go into quarantine starting from Jan. 8, the National Health Commission said on Monday in a major step towards easing curbs on its borders

·     NIO slides after cutting its Q4 delivery outlook to 38,500-39,500, down from previous outlook of 43,000-48,000, saying it has been facing challenges in deliveries and productions, along with supply chain constraints, caused by the outbreak of COVID-19 in China

·     PTON is offering refurbished bikes across the continental U.S. and Canada at a discount of up to $500 over new bikes. The program, called Peloton Certified Refurbished, will provide models priced at $1,145 and $1,995 with the same 12-month warranty provided with new bikes.

·     RIVN falls for the 12th straight day and now down -82% YTD given the mass exodus in electric vehicle stocks to end the year

·     TM reports a 1.5% rise in November global vehicle output, reaching a new record of 833,104; said domestic production slid 3.3% to 266,174 vehicles, while overseas output rose 3.8% to an all-time high of 566,930 for the month.

·     TSLA tumbles to fresh 2-year lows, falling a 6th straight day as suspended production at its Shanghai plant as of Saturday, bringing forward by a few days a plan to pause most work during the final week of the year


Energy, Industrials and Materials

·     ALB shares fall along with other lithium producers (LTHM, SQM) amid weakness in EV sector following headlines from NIO and TSLA today

·     Industrials among leaders early, led by transports, machinery, aerospace, and defense sectors as the rotation out of high growth tech continues to unwind and find a new home

·     The largest U.S. crude oil refinery began on Sunday to restart key units central to its capacity and motor fuel production following a near total shutdown late last week in severe cold weather. The restart of units at Motiva’s 626,000 barrel-per-day Port Arthur, Texas refinery could take up to 16 days, Reuters reported


Technology, Media & Telecom

·     Chinese tech names rally – BABA, BIDU, PDD, JD and others as China will stop requiring inbound travelers to go into quarantine starting from Jan. 8, the National Health Commission said

·     Crypto related names lower as Bitcoin falls 1% to $16,659 (COIN, SI, MSTR, RIOT, MARA slip)

·     Financial Times reports AAPL could experience further supply chain challenges in China as the govt’s aggressive reopening causes a surge in infections, leading to a jump in worker absenteeism

·     Nikkei reported component manufacturer Kyocera will double the amount of money spent on semiconductor manufacturing and R&D to ~$9.8B over the next three fiscal years

·     Nikkei reports Tokyo is charging Apple (AAPL Japan $98M in back consumption taxes

·     WDC issued an 8-K after the close Friday outlining adjustments to the company’s debt covenants. Put simply, Wells Fargo said they view this as a negative announcement


Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.