U.S. Stocks Start 2022 at Record; Treasuries Fall: Markets Wrap

(Bloomberg) -- U.S. equities climbed to a record while Treasuries extended losses as traders braced for the start of a potentially volatile year and three expected rate hikes from the Federal Reserve.

The S&P 500 rose 0.6%, following stocks in Europe to an all-time high, as trading volume remained light with some markets still closed for holidays. The yield on the U.S. 10-year note rose 13 basis points to 1.64% -- its worst start to a year since 2009 -- and the dollar gained.

“Bottom line, the outlook is positive for stocks, but the removal of stimulus/accommodation from the global economy is a major theme to watch as we start 2022,” wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. “It'll be the first time since 2018 that the Fed is hiking rates, and that change will impact markets throughout the year.”

Among notable stock moves, Tesla Inc. climbed 14% as the carmaker navigated supply-chain disruptions to report blowout deliveries for the fourth quarter. Apple Inc. gained, giving it a $3 trillion market value. And in Hong Kong, property shares dropped while China Evergrande Group halted trading.

Read more: Here's (Almost) Everything Wall Street Expects in 2022

“As we flip the calendar over, many of the current market concerns are well known and arguably well priced in at both the index and more prominently at the average stock level,” wrote Art Hogan, chief markets strategist at National Securities. “We suggest markets have done an overly efficient job in selling the rumor, and will likely start buying the news.”

Elsewhere, oil futures in New York traded near $76 a barrel following news Libya's crude output is expected to fall to the lowest in more than a year. Gold fell and Bitcoin dropped to $45,900.

What to watch this week:

• FOMC meeting minutes scheduled for release Wednesday
• Fed's Bullard discusses the U.S. economy and monetary policy in an event on Thursday
• Fed's Daly discusses monetary policy on a panel Friday
• ECB's Schnabel speaks on a panel Saturday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.6% as of 4 p.m. New York time
• The Nasdaq 100 rose 1.1%
• The Dow Jones Industrial Average rose 0.7%
• The MSCI World index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.5%
• The euro fell 0.7% to $1.1295
• The British pound fell 0.4% to $1.3477
• The Japanese yen fell 0.2% to 115.34 per dollar

Bonds

• The yield on 10-year Treasuries advanced 13 basis points to 1.64%
• Germany's 10-year yield advanced six basis points to -0.12%

Commodities

• West Texas Intermediate crude rose 1% to $75.95 a barrel
• Gold futures fell 1.5% to $1,801.80 an ounce

©2022 Bloomberg L.P.