U.S. equity futures were muted on the last trading day of the year, signaling a quiet end in a year of repeated records on Wall Street over low interest rates and the deployment of Covid-19 vaccines .
Futures for the S&P 500 edged down less than 0.1% on Friday. The broad market index ended slightly lower on Thursday, but is on track to end the year up around 27%, which would be its biggest annual percentage gain since 2019. Contracts for the Nasdaq-100 focused on technology and futures for the Dow Jones Industrial Average each posted a decline of nearly 0.1% on Friday.
The calm of Friday’s trading juxtaposes a busy year in markets in which individual investors have crammed into memes stocks and the rollout of Covid-19 vaccines and low interest rates have prompted investment in stocks. These factors have helped the S&P 500 close at 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 recovery has also been fueled 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 gained more than 30%.
“This is truly the year of economic recovery,” said Sean Markowicz, investment strategist at Schroders. “In 2022, I see growth slowing down as the massive political stimulus in response to the pandemic wears off.”
Investors are watching a number of risks up to 2022 that could derail the market recovery. Cases of the Omicron variant of Covid-19 are on the rise, forcing some companies to cut services and hours while workers make themselves sick. U.S. inflation hit a nearly four-decade high last month, raising questions about how many price hikes Americans can absorb and whether that will affect corporate profits. The Federal Reserve has also set the stage for a series of interest rate hikes starting next spring.
In bond markets, the benchmark 10-year Treasury bill yield was unchanged from 1.514% on Thursday. The yield was up 0.601 percentage point this year as of Thursday, the largest year-over-year return gain since 2013, according to Dow Jones Market Data. Investors sold their government bonds, which pushed up yields, because holding bonds that pay less than inflation means racking up a loss. Yields and prices move in the opposite direction.
Overseas, the pancontinental Stoxx Europe 600 remained stable, with closed markets in Germany, Spain and Italy. The general market index has increased by more than 20% this year.
Shares of Chinese internet and tech companies surged in Hong Kong on the last day of the year, following an increase in their corresponding U.S. certificates of deposit overnight. The Hang Seng Tech Index, which tracks the city’s 30 largest listed tech companies, rose 3.6% on Friday in a cutback trading session. The larger Hang Seng index gained 1.2%.
China’s Shanghai Composite added 0.6% on Friday. The markets in South Korea and Japan were closed for a holiday.
Write to Caitlin Ostroff at [email protected]
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