Equity futures signal a calm end to years of big gains

US stock futures ticked lower on the last trading day of the year, indicating a quiet close a year of repeated records on Wall Street about low interest rates and rollout of Covid-19 vaccines.

Futures for the S&P 500 fell 0.1% on Friday. The broad market index ended a little lower Thursday but is about to end the year about 27% higher, which would be its largest annual percentage gain since 2019. Contracts for the technology-focused Nasdaq-100 were flat, and futures for the Dow Jones Industrial Average ticked 0.2% lower.

The quiet trading on Friday equates to a busy year in markets where individual investors piled up in meme stocks, and the rollout of Covid-19 vaccines and low interest rates provided incentives to invest in stocks. These factors helped the S&P 500 close a record 70 times this year, more than a quarter of all trading days, according to Dow Jones Market Data.

Much of the broader market upturn was also driven by a small group of massive stocks, such as

Apple,

Tesla and

Microsoft.

Microsoft and Tesla shares have each risen more than 50% this year, while Apple has risen more than 30%.

Stock futures pointed to a subdued opening on Wall Street.


Photo:

Mark Lennihan / Associated Press

“This is truly the year of the economic recovery,” said Sean Markowicz, investment strategist at Schroders. “In 2022, I see growth cooling as the massive political stimulus in response to the pandemic fluctuations.”

Investors see a number of risks heading into 2022 that could derail the market rally. Cases of the Omicron variant of Covid-19 are increasing, causing some companies to limit services and hours as workers report sick. US inflation reached a peak in almost four decades last month, which raises questions about how much price increases Americans can absorb and whether it will affect corporate earnings. The Federal Reserve has also set the stage for one series of interest rate hikes beginning next spring.

In the bond markets, the yield on the leading 10-year government bond ticked down to 1.505% from 1.514% on Thursday. Interest rates rose 0.601 percentage points this year as of Thursday, the largest one-year rate hike since 2013, according to Dow Jones Market Data. Investors have sold out of government bonds, which has pushed up interest rates because holding bonds that yield less than inflation means they are locking in a loss. Dividends and prices move the other way around.

Abroad, the pan-continental Stoxx Europe 600 fell almost 0.2% lower, with markets closed in Germany, Spain and Italy. The broad market index has risen more than 20% this year.

The shares of Hunter Douglas, a Dutch manufacturer of blinds and coatings, rose 70% in trading in Amsterdam after private equity firm 3G Capital agreed to buy a majority stake in the company.

The fast-spreading Omicron variant is blurs the outlook for the oil markets after a rapid recovery in demand, prices pushed to the highest level for years. Brent crude oil futures, benchmark in the global oil markets, fell 1.7% on Friday to $ 78.21 per share. barrel.

Shares in Chinese Internet and technology companies ran in Hong Kong on the last day of the year following an increase in their equivalent U.S. depository receipts overnight. The Hang Seng Tech Index, which tracks the 30 largest technology companies listed in the city, rose 3.6% on Friday in a holiday-shortened trading session. The broader Hang Seng index rose 1.2 per cent.

China’s Shanghai Composite rose 0.6% on Friday. The markets in South Korea and Japan were closed due to a public holiday.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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