Stocks End Banner Year Few Imagined in January: Markets Wrap

(Bloomberg) -- U.S. stocks ended the year with a rally few predicted back in January, even after a slide late in the final trading day.

The S&P 500 and Nasdaq 100 both fell on Friday in a choppy session with thin volumes. But that performance follows a banner year for equities, with the S&P 500 and Nasdaq 100 surging about 27%, surpassing even the most bullish outlooks at the start of the year.

The benchmark S&P 500 closed the year out at 4766, down less than 30 points from its 70th record close reached mid-week. That's still a far cry from levels predicted by analysts in a January survey, where the top projection was 4,400 and average of 22 estimates was 4,074.

Trading was light as investors drew a line under a strong year for global equities as economies recovered from the pandemic. Bond investors are nursing losses as many central banks move toward tighter monetary settings to fight inflation. How the coronavirus and those policy shifts shape economic reopening are key for the outlook.

“If there is one thing that we have learned this year, it is that the U.S. economy has proven to be resilient in the face of pandemic-related challenges,” said Brett Ryan, senior U.S. economist at Deutsche Bank. While omicron and fiscal uncertainty present risks, “the economy would still expand at a well-above-trend pace even if these risks are realized,” he said

Elsewhere, the dollar was lower against most of its Group-of 10-peers on Friday, while oil declined, paring the biggest annual advance since 2009. Bitcoin rallied for a second session, paring its biggest monthly drop since May to trade around $48,000. 

Traders are continuing to monitor China's struggling property developers. A Chinese state-owned enterprise will take a 29% stake in China South City Holdings Ltd., in the latest sign of the authorities stepping up support for ailing real-estate firms. 

The spotlight was also on talks by telephone between U.S. President Joe Biden and Russian President Vladimir Putin. The Kremlin said Putin was satisfied with the outcome of the discussions. The U.S. and its allies have raised alarm over a potential Russian invasion of Ukraine.

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.3% as of 4:00 p.m. New York time
• The Nasdaq 100 fell 0.7%
• The Dow Jones Industrial Average fell 0.2%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%
• The euro rose 0.5% to $1.1378
• The British pound rose 0.2% to $1.3530
• The Japanese yen was unchanged at 115.08 per dollar

Bonds

• The yield on 10-year Treasuries was little changed at 1.51%
• Germany's 10-year yield was little changed at -0.18%
• Britain's 10-year yield was little changed at 0.97%

Commodities

• West Texas Intermediate crude fell 1.9% to $75.52 a barrel
• Gold futures rose 0.9% to $1,830.90 an ounce

©2022 Bloomberg L.P.