Stock futures fell slightly in premarket trading on Friday as investors braced for the final day of trading in the worst year for stocks since 2008.
Futures contracts linked to the Dow Jones Industrial Average slid 130 points, or 0.4%. S&P 500 and Nasdaq 100 futures traded down 0.6% and nearly 0.9%, respectively.
The overnight moves followed a rally on Thursday, with the Nasdaq Composite and S&P 500 climbing about 2.6% and about 1.8% respectively. The Dow jumped 345 points, or 1.05%.
For the week, the Dow and S&P are slightly higher, with the Nasdaq on track for a modest loss. All major averages are lower for December and are about to break a two-month winning streak.
Friday marks the last day of trading in what has been a painful year for stocks. A volatile bear market, persistent inflation and aggressive rate hikes from the Federal Reserve have hurt growth and technology stocks. These factors also weighed on investor sentiment.
The top three averages are heading for their worst year since 2008, slated to snap a three-year winning streak. The Dow did the best of the indexes in 2022, down 8.58%, while the S&P and the tech-heavy Nasdaq fell 19.24% and 33.03%, respectively.
Despite the annual losses, the Dow Jones is on pace for a 15.65% quarterly gain and is poised to break a three-quarter losing streak. It’s also heading for its best quarter since the second quarter of 2020. The S&P is up 7.35% and set to break three straight quarterly losses. The Nasdaq slid 0.92%, its fourth consecutive negative quarter for the first time since 2001.
All major S&P sectors ended Thursday with gains, led by communication services. For the quarter, consumer discretionary and communication services were the only sectors that lost. Energy is the only sector on pace for annual gains after jumping nearly 58%.
S&P 500 communications services stocks were down more than 40% on the year and consumer discretionary fell 37.4%, while energy, the only positive sector in the large-cap index, climbed almost 58%.
As the calendar year draws to a close, some investors think the pain is far from over and expect the bear market to persist until a recession hits or the Fed pivots. Some are also predicting that stocks will hit new lows. Thursday’s moves likely stemmed from a combination of short hedging, value investing and momentum traders joining the rally, said Adam Sarhan, CEO of 50 Park Investments.
“Nothing has fundamentally changed,” he said. “We just had a huge drop. The market has extended lower, and it’s perfectly normal to see a bounce here.”
On the economic front, Chicago PMI data for December is due out on Friday. Next week will see a slightly more active slate of economic data, highlighted by the nonfarm payrolls report scheduled for January 6. Financial markets are closed on Monday for the New Year holiday.
— Gabriel Cortes contributed reporting
Correction: A chart in this story has been updated to reflect the correct year-to-date decline for the Dow Jones Industrial Average.