U.S. stocks were little changed Friday morning, hovering just below their flatline to round out a thinly-traded last week on Wall Street.
Over the past two years, the final day of the year-end bull run known to investors as the Santa Claus Rally has typically been bearish, Probabilities Fund Management chief market strategist Jeffrey A. Hirsch points out in his Stock Trader's Almanac.
U.S. equity markets will be open regular hours this New Year’s Eve for the first time in a decade, thanks to NYSE Rule 7.2. It states that trading is closed either Friday or Monday if a holiday falls on a weekend, with the exception of “unusual business conditions, such as the end of a monthly or yearly accounting period.” Bond traders will get to call it a day at 2:00 p.m. ET.
Markets mostly charged higher this week, even as reports of rising COVID-19 cases pour in across the globe. Swings were exaggerated by low trading volumes, with many on Wall Street on vacation.
The S&P 500 rallied to an intraday high on Thursday but receded late in the trading session to end lower after hitting its 70th record close of the year Wednesday. The index recorded a new all-time high every month this year, making 2021 among its best years ever, according to data published by LPL Research. The only other year it did so was in 2014.
“Although many were caught flat-footed by the strong equity returns this year, there were numerous clues,” said Ryan Detrick, LPL Financial chief market strategist, in a note.
“The huge end of year rally in 2020 was the first clue,” Detrick said. “Add in a strong first five days, a strong first quarter, the S&P 500 holding above the December lows in the first quarter, and right there you had several signals early in the year that strong returns were quite possible in 2021.”
Insigneo Financial Group CIO Ahmed Riesgo told Yahoo Finance Live that it was actually strong returns by only some companies that contributed to the index’s gains.
“Did the market have a great year in 2021? Most people would say absolutely,” he asserted, though adding it is more accurate to say that a few stocks have done “phenomenally” well, while the vast majority have been in the red.
“I think what you’re going to get next year is that internal rotation where these few stocks that performed very well in 2021 are going to under perform, perhaps drag the market down a bit, while the vast majority of stocks will shoot up,” Riesgo said. “All in all, taken together, this points to around mid- to single-digit returns for the [S&P 500] next year.”
Inflation is expected to be a focal point among investors in the new year. Rising prices have nudged the Federal Reserve into a hawkish pivot from its earlier predictions of "transitory inflation." Now, the central bank is planning a quicker unwinding back of its pandemic-era monetary policies, and has boosted its forecasts for the pace of potential rate hikes.
“We need to get through the peak of some of this inflation data that we’re reading,” Chris Pollard, head of market strategy at Cowen Research, told Yahoo Finance Live. “The first two months of this year are going to see some pretty elevated core PCE numbers which are what the Fed focuses policy on.”
12:21 p.m ET: PayPal poised for worst year since Ebay spinoff
PayPal Holdings, Inc. (PYPL) is on pace for its biggest annual decline since it was spun off by Ebay in 2015. The company's shares have fallen 19% this year, making it the worst performer in the S&P 100, according to Bloomberg data.
The online payments provider was down ~1.25% in the early afternoon to about $189.48 per share.
PayPal shares have fallen around 30% since the company began exploring a deal to acquire Pinterest. However, the company walked back on its plan to buy the social media platform, stating in October that it was no longer pursuing the acquisition.
Buy-now, pay-later platforms have also placed pressure on PayPal and its peers in the payments sector during the second half of 2021 amid concerns over competition.
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12:05 p.m. ET: Air travel chaos continues amid virus-related disruptions
Airline stocks recouped some of this week’s losses in intraday trading but remain under pressure as flight cancellations and delays persist.
As of early Friday, over 1,100 U.S. flights, both within the country and entering or departing it, were cancelled, worsening an already ugly week for holiday air travel disrupted by a sharp increase in COVID-19 infections among pilots and crew members.
“It’s a controlled meltdown, put it that way,” Boyd Group International president Mike Boyd told Yahoo Finance earlier this week. Airlines “know where they’re going to be short pretty much ahead of time, and then they have to adjust for it.”
Shares of JetBlue Airways Corporation (JBLU) of Delta Air Lines (DAL) were mostly flat in midday trading at $14.26 and $39.04, respectively. American Airlines (AAL) was down 0.54% to $17.97 per share, along with United Airlines (UAL), which ticked 0.48% lower to $43.92.
Meanwhile, Delta updated its policies for workers who get infected with COVID-19 to shorten the isolation period, in accordance with new guidance from the CDC that halves the recommended quarantine time from 10 to five days.
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9:30 a.m ET: Stocks waver as rally fades
Here were the main moves by the major averages at today's open:
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S&P 500 (^GSPC): -4.44 (-0.09%) to 4,774.29
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Dow (^DJI): -27.53 (-0.08%) to 36,370.55
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Nasdaq (^IXIC): -24.65 (-0.16%) to 15,741.56
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Crude (CL=F): -$0.77 (-1.00%) to $76.22 a barrel
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Gold (GC=F): +$12.10 (+0.67%) to $1,826.20 per ounce
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10-year Treasury (^TNX): -1.3 bps to yield 1.5020%
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7:00 a.m ET: Contracts on the S&P, Dow, and Nasdaq dip ahead of final trading session
Here’s how futures fared ahead of the year's last market open:
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S&P 500 futures (ES=F): =13.75 points (-0.29%), to 4,758.50
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Dow futures (YM=F): -106.00 points (-0.29%), to 36,185.00
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Nasdaq futures (NQ=F): -53.75 points (-0.33%) to 16,376.50
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6:00 p.m. ET Wednesday: Futures inch higher after markets close in the red
Here’s how contracts on the major indexes fared ahead of 2021’s final trading day:
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S&P 500 futures (ES=F): 2.50 points (0.05%), to 4,774.75
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Dow futures (YM=F): 14.00 points (0.04%), to 36,305
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Nasdaq futures (NQ=F): 10.50 points (0.06%) to 16,440.75
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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