Alexandra Semenova·ReporterDecember 28, 2022, 1:05 PM·3 min readU.S. stocks sank Wednesday, extending a sharp year-end slide as investors hobbled toward the end of a gruesome 2022.
The S&P 500 (^GSPC) dropped 1.2% after losses picked up into the close, while the Dow Jones Industrial Average (^DJI) shed 366 points, or 1.1%. The technology-heavy Nasdaq Composite (^IXIC) declined 1.4%.
Losses continued across the board Wednesday after equities began the holiday-shortened week — a period that normally sees a seasonal end-of-year rally — on a down beat. In the previous session, the S&P 500 posted a 0.4% loss and the Dow closed just 0.1% above the flatline, while technology stocks dragged the Nasdaq down 1.5%.
Tesla shares (TSLA) clawed back 3.3% Wednesday, snapping a seven-day selloff that brought the stock down nearly 70% from its November 2021 all-time high, with declines intensifying over the past couple of months over concerns around CEO Elon Musk's management of social media platform Twitter.
Tesla's tailspin continued this week after Reuters reported Tuesday that the electric carmaker will reduce output at its Shanghai factory in January, adding to woes from a separate report by Reuters over the weekend that said Tesla would suspend production a day earlier than planned at its Shanghai Gigafactory over rising COVID-19 infections in China.
Meanwhile, Apple's (AAPL) stock tumbled 3%, falling below the key technical $130 level and setting a fresh 2022 low Wednesday for a second day, while also weighing on the broader market.
"One of the most important items we’ll be watching over the next week or two will be the action in Apple," Miller Tabak Chief Market Strategist Matt Maley said in a note Wednesday. "The reason that the $130 level is so important is because it’s where the lows from June come in (which was the low for 2022)."
"Therefore, any meaningful break would give the stock a key 'lower-low'…and that would be quite bearish because Apple has already broken below its trend-line from the March 2020 pandemic lows (and below its 200-day moving average)."
U.S. and global stocks are on pace for their worst drop since the 2008 financial crisis. Pessimism around the outlook for financial markets and the economy amid a backdrop of rising interest rates and fears a recession is underway have thrown a wrench in prospects for the seasonal year-end rally markets stocks typically experience at the end of December.
Investors' cautiousness over the year ahead also outweighed a move by China to ease travel restrictions this January as the world's second largest economy further reopens after three years of zero-COVID protocols.
“The question is no longer about the speed with which China reopens,” China Beige Book International Managing Director Shehzad Qazi told Yahoo Finance Live on Tuesday. “The real question now is how quickly can Beijing undertake the policies that are necessary for it to gain control of the virus?"
"We haven't hit the peak of COVID cases — that is still ahead of us — which means that some of the bad news is still ahead of us, and until we are past that point, we can't really start talking about an economic recovery."
Elsewhere in markets, oil slipped 1.2% after climbing on demand expectations from China's loosening of COVID curbs and the reopening of U.S. refineries after this week's winter storm closures. U.S. Treasury yields charged higher, with the 10-year note topping 3.8%. The U.S. dollar index rose.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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