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Stock futures fell Monday evening as traders braced themselves for a flurry of economic data and the minutes from the latest Federal Reserve meeting this week to kick off the new year.
Futures tied to the Dow Jones Industrial Average fell 72 points, or 0.2%. S&P 500 futures shed 0.28% and Nasdaq 100 futures lost 0.44%.
All of the major averages closed 2022 with their worst losses since 2008, each snapping a three-year win streak. The Dow ended the year down about 8.8% at 33,147.25, and 10.3% off its 52-week high. The S&P 500 lost 19.4% for the year and now sits at 3,839.50, more than 20% below its record high. The tech-heavy Nasdaq tumbled 33.1% last year. It's starting 2023 almost 34% from its record, at 10,466.88.
Inflation sparking "the worst defeat for both stocks and bonds in decades" was the biggest investor narrative for 2022, according to Greg Bassuk, CEO of AXS Investments. The new year kicks off with a cloud of worry that a "harder-than-desired landing" by the Fed and its inflation fighting moves could push the economy into a recession.
"2022 was characterized by an inflation-blindsiding market rout, in part because the year was kicked off with Wall Street and Main Street both anticipating a containment on rising prices and a Federal Reserve that would hold rates at lower levels," he said. "But a fiercely opposite reality endured as inflation skyrocketed."
"Moving into 2023, as prices remain materially elevated, investors would be prudent to consider inflation-sensitive assets, as well as cyclical and other stocks that tend to do well in rising price environments," he added.
Investors are getting a bundle of data in the first trading week of the year and investors will be watching closely, looking for opportunities to adjust their portfolios to recover from the 2022 carnage. Wednesday is a big day with the Job Openings and Labor Turnover Survey, better known as JOLTS, due out in the morning and the minutes of the Fed's latest policy meeting set to come out in the afternoon.
They're also looking forward to Friday's December jobs report, the final employment report the Fed will have to consider before its next meeting on Feb. 1. There are also several speeches by Fed presidents scheduled Thursday and Friday.
First up, however, are S&P Global manufacturing PMI and construction spending, due out at 9:45 a.m. and 10:00 a.m. ET on Tuesday.
Walgreens Boots Alliance and Constellation Brands will also report their quarterly financial results on Thursday, though it's an otherwise quiet week for earnings reports.
Some of the biggest questions for market performance in 2023 may find answers in the first quarter of the year.
Heading into the new year, there's an unusually high level of consensus among Wall Street strategists in their stock market outlooks. The common view is that the stock market will perform poorly in the first quarter and probably the second, carving out a new low before improving into the end of the year.
For more on the year ahead, read the full story on CNBC Pro.
— Patti Domm, Tanaya Macheel
Stock futures jumped at the start of trading Monday evening.
Dow Jones Industrial Average futures climbed 229 points, or 0.69%. S&P 500 futures added 0.85% and Nasdaq 100 futures rose 0.96%.
— Tanaya Macheel
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