Market Review: December 30, 2022

Closing Recap

Friday, December 30, 2022





DJ Industrials




S&P 500








Russell 2000





Equity Market Recap

·     Stocks close out 2022 with another loss (though rally into the close) in what has been a difficult year for bullish investors, looking forward to turning the calendar. All three major stock indexes were down on the day, but today’s market action summed up the entire year: Energy was the only S&P sector higher on the day and was the only group in the green for 2022, too (+58% YTD). This would mark the first calendar year on record going back to 1990 that only one S&P 500 sector finished the year with gains, according to Dow Jones Market Data. Utility stocks are next in line, with a decline of -1.9% while the biggest sector decliners were Communications (-38%), Consumer Discretionary (-37%), and both Technology and REITs (-28%). Surging interest rates from the Fed (and global central banks), 40-year high inflation, a Ukraine/Russia conflict, the collapse of crypto assets following FTX bankruptcy, signs of a recession, plunging technology stocks (AMZN, META, GOOGL, TSLA) and higher energy stocks among the top stories of 2022.

·     After five-straight years of growth outperformance, 2022 turned out to be value’s year: growth is on pace for its worst year vs value ever (value’s best year ever vs growth) using Refinitiv data back to the mid-1990s: With a near 30% loss for the year, the IGX is on pace for its biggest yearly decline since 2008. On the other hand, the IVX is only off 7%. As a result, the IGX/IVX ratio is down nearly 25% this year.

·     Mortgage rates rose in the last week of 2022, hitting highs above 7% this fall, but fell to 6.42% as of yesterday – well above the 3.11% at the same time last year! When mortgage rates were around 3% at the end of last year, a borrower who bought a $500K home with a 20% down payment could expect to pay $207K in interest on the loan over 30 years – but with a mortgage rate of 6.42%, the borrower would expect to pay nearly $503K in interest over that period!

·     According to Charlie Bilello, every single city in the Case-Shiller 20-City Index saw a decline in home prices in August, September, and October. The last time all 20 cities were down 3 months in a row: Nov 2008 – Jan 2009. Also, The Fed’s balance sheet was reduced by 2.4% (-$206 billion) in 2022, the first annual decline since 2018. If QT continues at the current pace (-$95 billion/month), we’ll see a further reduction of 13.3% (-$1.14 trillion) in 2023.

·     Europe’s Stoxx 600 fell -1.3% today and posts -12.9% annual decline, worst yearly performance since 2018; German DAX -1.1% today and records -12.3% annual loss (worst since 2018); France’s CAC 40 down -1.6% on day and -9.5% for the year (worst since 2018); Spain’s IBEX down -1.1% on day with -5.6% decline this year and the Euro Stoxx index -1.4% today and biggest annual decline since 2018, down 14.4% in 2022

·     Sentiment awful all year long – will it improve in 2023? Bespoke Investment noted 2022 is the first year in the history of the AAII Sentiment survey that bullish sentiment was below its historical average in every week of the year. The five worst days of 2022 were: Sept 13th, -4.3% after "hotter" CPI reading, May 18th -4% after TGT earnings miss, June 13th -3.9% again on "hot" CPI data, April 29th -3.6% after AMZN miss and May 5th -3.6% following Fed meeting.


Economic Data:

·     December Chicago PMI: 44.9, above the 41.0 consensus and 37.2 in November but remains deep in contraction territory (4th straight month below the 50-level) and worst December print since 2015. The production index rose to 39.2 in December, new orders index rose sharply to 44.1, the highest level since August, orders backlogs index increased to 53.7, employment index fell to 40.8, and prices paid index eased to 64.1, the lowest since September 2020.



·     Oil prices finish higher as WTI crude rose +1.86 or 2.37% to settle at $80.26 per barrel and Brent crude futures settle at $85.91/bbl, up $2.45, 2.94%. Oil prices rise 6.7% for 2022 but end well below the highs after Russia invaded Ukraine earlier this year of $106.51. Natural gas prices rise for the 3rd straight year, gaining around 20% this year, but follows a sharp retrace in December.

·     A Reuters survey of 30 economists and analysts forecast Brent crude would average $89.37 a barrel in 2023, about 4.6% lower than the $93.65 consensus in a November survey. The global benchmark has averaged $99 per barrel in 2022. U.S. WTI crude is projected to average $84.84 per barrel in 2023, versus the previous month’s $87.80 consensus.

·     Gold prices end little changed, edging higher 20c to settle at $1,826.20 an ounce, managing a modest decline for the year, strong considering the sharp decline in many asset classes.


Currencies & Treasuries

·     It’s been a dreadful year for Bonds, as Treasury yields post massive spikes given the aggressive rate hike cycle from the Federal Reserve. The 10-year yield rose 4.6 bps to 3.881%, off 33-bps from its 52-week high of 4.231% hit Oct. 24, 2022, and up 240 bps from its 52-week low of 1.496% hit a year ago. The 2-year yield rose 6 bps today to 4.43%, rising 7 of the last 9 trading days and up 370 bps from its 2022 closing low of 0.764%. Yield is off 30-bps from its 52-week high of 4.726% hit Nov. 7, 2022.

·     The U.S. dollar a leader in currencies this year, on track for its biggest annual gains since 2015 (+8.5%), as the British Pound falls more than 10% since the start of the year and the euro is down more than 5.5% to 1.07 (but a far cry of year low of 0.9537) after a 7% drop in 2021. Federal Reserve rate hikes and fears of a sharp slowdown in global growth boosted the greenback. The U.S. Federal Reserve has raised rates by a total of 425 basis points since March. The Bank of Japan’s ultra-dovish stance has seen the dollar gain 13.7% versus the yen so far this year.






WTI Crude















10-Year Note





Sector News Breakdown


·     Brutal year for the S&P retailing index (XRT), falling over -34% for its worst year on record as consumers slowed spending. Biggest losers in the index were AMZN (-50 YTD) and KMX (-53% YTD) while TGT (-36% YTD) and WMT (-2% YTD) warned on inflation fears late Spring. Shares of home improvement retailers LOW and HD each down around -23% YTD.

·     ENVX appointed Raj Talluri as its CEO, replacing co-founder Harrold Rust, effective Jan 18; Talluri was previously at Micron (MU)

·     HSY has been sued by a consumer who accused the company of selling dark chocolate that contains harmful levels of lead and cadmium.

·     NKLA entered into securities purchase agreement for sale of up to $125 mln in initial principal amount of senior convertible notes

·     In Homebuilding, Wedbush said for 2023, they said stable or declining rates should support owning builders, and assume a favorable rate environment in 2023 should support owning affordable builders that can deliver homes in a timely fashion – names CVCO, SKY, DHI, CCS


Energy, Industrials and Materials

·     CVX is sending two oil tankers to Venezuela, one of which will load the first cargo of crude destined for the United States in nearly four years, Reuters reported

·     For EOG, Keybanc said they remember when the Utica Shale was an up-and-coming resource play and now see renewed excitement for the play, on the heels of its announcement that it established a position in the liquids-rich window of the play

·     LUV, which canceled two thirds of its flights the past few days amid a winter storm, said it plans to return to a regular schedule on Friday

·     MESA said Q4 revenue down 3.9% to $125.6M from $130.7M y/y and adj EPS loss wider than expected at (-$0.37)



·     FUTU and TIGR tumble after China’s securities regulator (CSRC) said that the online brokerages have conducted unlawful securities businesses and will be banned from opening new accounts from mainland Chinese investors. The China Securities Regulatory Commission will ask Futu Holdings and UP Fintech Holding to correct illegal acts in cross-border securities business

·     For P&C insurers (ALL, CB, TRV), Global insurance losses for natural catastrophes are projected to reach $112 billion in 2022, reinsurance broker Guy Carpenter said on Friday, driven by the impact of Hurricane Ian which hit Florida earlier this year. Hurricane Ian and other natural catastrophes caused an estimated $115 billion of insured losses so far this year, well above the 10-year average of $81 billion, reinsurer Swiss Re estimated earlier this month – Reuters

·     The Bahamas seized $3.5 billion of FTX’s digital assets after Sam Bankman-Fried warned of cyberattacks against the bankrupt crypto exchange



·     Drugmakers including PFE, GSK, SNY, AZN and BMY plan to raise prices in the United States on more than 350 unique drugs in early January, according to data analyzed by healthcare research firm 3 Axis Advisors. – Reuters

·     CNTB provided a business and clinical development program update saying its cash runway now expected to extend into at least 2025

·     HOTH announces $10 million private placement priced at-the-market under Nasdaq rules

·     KALA another daily advance after the FDA accepted its investigational new drug application this week (stock very volatile all week)

·     NVAX announces initiation of phase 2 trial for COVID-19-influenza combination and stand-alone influenza vaccine candidates – initial results of trial are expected mid-year 2023


Technology, Media & Telecom

·     MKM released a “Black Swan” and predictions list for the Internet space in 2023 which included: 1) "AI wars" will escalate as GOOGL and MSFT race to acquire ChatGPT’s creator, OpenAI; 2) predictions include the premise that TikTok ends up banned in the United States; 3) that a ballyhooed mixed-reality headset from AAPL turns out as a "dud"; 4) that going public via SPAC companies may outperform traditional initial public offerings and direct listings; 5) predicts that PINS and PTON will no longer be independent public companies; 6) META will "dramatically" scale back ambitions for the "Zuckerverse"

·     MU downgraded to Hold from Buy at Argus in challenging environment; reflects prospects for deep operating losses at Micron over the next few quarters

·     SJR rises as Canada’s competition tribunal approved on Thursday Rogers Communications Inc’s (RCI) C$20 billion ($14.77 billion) bid for Shaw Communications Inc (SJR), ending the companies’ 20-month-old dispute with the antitrust authority


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.