securities – Page 37

U.S. stocks rise to 3-week highs as traders build on Friday’s rally

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U.S. stocks opened at their highest levels since mid-December on Monday as the main indexes built on gains that followed the release of monthly jobs data from the Department of Labor. The S&P 500
SPX,
-0.08%
gained 21 points, or 0.6%, to 3,916. The Dow Jones Industrial Average
DJIA,
-0.34%
advanced 133 points, or 0.4%, to 33,764. The Nasdaq Composite
COMP,
+0.63%
rose 105 points, or 1%, to 10,674. Stocks logged their biggest daily advance for the year so far on Friday after signs of slowing wage growth from the monthly jobs report added to the notion that inflation is slowing, while the pace of job creation — while slower than the prior month — remained relatively robust, suggesting the U.S. economy is taking the Federal Reserve’s rate hikes in stride.

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January 9, 2023

‘Markets are going to get rocked’ as Fed is likely to push rates higher, economist warns

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The Federal Reserve is likely to raise interest rates more than the markets now expect, says Ricardo Reis, an economist at the London School of Economics.

“Markets are going to get rocked,” Reis told MarketWatch on the sidelines of the American Economic Association annual meeting in New Orleans.

“All the risks are on the upside. A rate of 5.5% is the minimum,” he added.

Last month the Fed raised the top end of its benchmark rate range to 4.5%. The central bank penciled in a 5.25% terminal rate.

Investors who trade in the fed-funds futures market now expect the Fed to stop raising when rates get to 5%.

Reis thinks the central bank will ultimately move rates higher.

The Fed is burned by failing to recognize the persistent upward move of inflation in 2021, he said.

“So I think they are biased toward over-tightening,” he said. “Either legitimately or because they are worried about fixing their past mistake, there are going to be tighter than you think.”

The economy is at a turning point and the Fed does face some “tough calls,” Reis said.

The key going forward is the path of wages.

Workers need to have their wages go up because their paychecks have not kept up with inflation.

So the Fed is going to have to gauge if the rise in wages is too much, just right or too little, he said.

If wages don’t rise much, inflation can quickly return to the Fed’s 2% target, he said.

If wages rise in line with productivity, the Fed won’t have to raise too much and inflation will come down to 2% in a few years.

This will be difficult because productivity is an economic variable that is hard to measure.

If wages spike, this would probably cause companies to continue raising prices, kicking off a wage-price spiral, Reis warned.

The Fed might overreact to the rise in wages, he said.

There is a scenario where rates go up “much more,” Reis said. But there is a range — it could be “much much more” or “much more” or “just more.”

Reis said that he was sympathetic to the idea that raising the unemployment rate to 5.5% was not a terrible outcome if it means a return to low inflation.

The unemployment rate hit 3.5% in December.

Stocks
DJIA,
+2.13%

SPX,
+2.28%
moved sharply higher Friday when the government reported relatively slow increase in wages in December. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.562%
fell to 3.56%.

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January 8, 2023

Kevin McCarthy elected House speaker, narrowly prevailing in 15th round of voting

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Top House Republican Kevin McCarthy succeeded early Saturday in his push to become his chamber’s next speaker, claiming the job after first falling short in well over a dozen rounds of voting.

McCarthy could handle only a few GOP defections given his party’s narrow majority in the House of Representatives, but in ballots this week he repeatedly saw around 20 Republicans vote against him before finally prevailing.

On Friday, McCarthy began to pick up some support from those Republican holdouts in a 12th round of voting, though it wasn’t sufficient to give him the job, so 13th and 14th ballots were held, followed by the 15th and final ballot.

See: House moves to 15th speaker ballot after McCarthy falls one vote short in 14th

Ahead of Friday’s voting, there were signs of a deal that could help McCarthy take the gavel. One of McCarthy’s critics, GOP Rep. Scott Perry of Pennsylvania, tweeted that he had switched to supporting the top Republican due to that deal.

“The framework for an agreement is in place, so in a good-faith effort, I voted to restore the People’s House by voting for @gopleader McCarthy,” Perry said.

See: Kevin McCarthy’s speaker deal to win over holdouts would ‘neuter’ him, and could mean more government shutdowns

There hadn’t been a need for multiple votes for a speaker election since 1923, and it’s the most ballots required since1860, just before the Civil War, when 44 ballots were needed.

Analysts have warned that the tensions over what’s typically a ceremonial election could signal that the GOP-run House will be dysfunctional throughout 2023 and 2024.

“In our view, the challenge to McCarthy underscores the difficulty that a narrow and fractured GOP majority will have in working with Democrats in the Senate on key issues such as the debt limit, government funding, and Ukraine in 2023,” said Benjamin Salisbury, director of research at Height Capital Markets, in a research note ahead of McCarthy’s election.

Republicans have taken control of the House thanks to wins in November’s midterm elections, returning to power in that chamber after four years in the minority.

But the GOP’s hopes for a strong red wave two years into President Joe Biden’s term were dashed, as the party has claimed just a small House majority and Democrats have maintained their grip on the Senate.

U.S. stocks
SPX,
+2.28%

DJIA,
+2.13%
closed sharply higher Friday as a monthly employment report showed that wage growth had slowed even as the unemployment rate fell to 3.5%, fueling hopes that the Federal Reserve’s interest-rate hikes aimed at taming inflation are starting to have the desired effect.

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January 6, 2023

Dow gains 700 points as stocks log biggest advance in 5 weeks

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U.S. stocks logged their biggest daily advance in more than 5 weeks on Friday as investors reacted to data showing the labor market and wage growth finally starting to cool. The S&P 500
SPX,
+2.28%
gained roughly 87 points, or 2.3%, to finish at 3,895 as the index snapped a four-week losing streak. The Dow Jones Industrial Average
DJIA,
+2.13%
climbed 700 points, or 2.1%, to finish at roughly 33,630. The Nasdaq Composite
COMP,
+2.56%
advanced 264 points, or 1.6%, 10,569. Labor Department data showed the U.S. economy added 233,000 jobs last month, which was fewer than the prior month, while beating economists’ expectations for 200,000 new jobs. Wages grew by a modest 0.3% last month.

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January 6, 2023

Dow drops 300 points as strong jobs data suggests more aggressive Fed rate hikes

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U.S. stocks finished lower on Thursday, with the Dow dropping more than 300 points, as strong jobs data and hawkish Fed commentary signaled more aggressive Federal Reserve interest-rate hikes to come. The S&P 500
SPX,
-1.16%
shed 44.87 points, or 1.2%, to finish at 3,808.10. The Nasdaq Composite
COMP,
-1.47%
dropped 153.52 points, or 1.5%, to 10,305.24. The Dow Jones Industrial Average
DJIA,
-1.02%
retreated 339.69, or 1%, to 32,930.08. Private payrolls data from ADP showed jobs growth last month was far more robust than economists had expected, stoking concerns that Friday’s monthly payrolls report might also surprise to the upside. One stock-market analyst told MarketWatch earlier that “good news” about the labor market is “bad news” for stocks and bonds, as it means the Fed has failed to undercut the labor market, a key step toward suppressing inflation.

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January 5, 2023

What does the stock market’s rocky 2023 start mean for the rest of the year?

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The first trading days of January loom large on Wall Street as being able to foretell the U.S. stock market’s direction for the full year. What does that mean for 2023?

Not much. January’s reputation is largely undeserved. Even when the market declines over the first sessions of January, it still is more likely than not to rise over the remainder of the year.

That should provide some solace to followers of these “first-days-of-January” indicators, who are biting their nails over the stock market’s weakness out of the starting gate on the first trading day of the year.

The accompanying table reviews the track records of the various iterations of these indicators. The percentages are based on the Dow Jones Industrial Average
DJIA,
-0.03%
back to its creation in the 1890s.

Length of initial period	% of time DJIA rises over remainder of year when it rises during initial period	% of time DJIA rises over remainder of year when it declines during initial period
First trading day of January	73%	53%
First 2 trading days of January	70%	56%
First 5 trading days of January	70%	58%
All of January	74%	56%

On the one hand, notice that there are greater odds of the market rising if it also rises in the first sessions of January. On the other hand, notice also that even when the market falls in those first sessions the odds of the market rising for the remainder of the year are still above 50%.

To put the table’s data in context, bear in mind that the odds of the stock market rising in any given calendar year are 64% (based on the Dow’s track complete history). So, depending on the “first-day-of-January” indicator on which you focus, the odds of an “up” year increase or decrease by a modest amount — between 6 and 11 percentage points. These differences are only marginally significant at the 95% confidence level that statisticians often use when assessing if a pattern is genuine.

There are several additional reasons not to put too much weight on these first-days-of-January indicators:

There is nothing particularly unique about January. Many other days of the year have the same apparent ability to foretell the market’s direction over the remainder of the next year. A trader intent on following the lead of all such “indicators” would be whipsawed into and out of stocks on a near-daily basis.
The marginally significant success of the early-days-of-January indicators traces in large part to the earlier part of the 20^th century. Since 1960, in contrast, their track records are not statistically significant.

The bottom line? Regardless of how the market performs over the first days of this month, the intelligent bet is that the stock market will rise this year.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

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January 3, 2023

‘Recession is what everyone is betting on’: 2023’s first trading day begins

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In the first trading day of the new year, U.S. financial markets were bogged down by the almost universal view that a recession is approaching.

A stocks rally fizzled out within the first 30 minutes of opening gains. Gold, a traditional safe haven, touched its highest level in six months, rising alongside silver and platinum. And 10- to 30-year Treasury yields, nestled in what’s known as the long end of the bond market, fell as investors jumped into government bonds — driving those yields down respectively to around 3.8% and 3.9%.

At the heart of the market moves was the strong sense that an economic downturn is all but inevitable at this point, following months of central bank interest rate hikes around the world — with the International Monetary Fund‘s chief Kristalina Georgieva warning that the economies of the U.S., European Union and China are all slowing simultaneously. Scion Asset Management founder Michael Burry said he expects another “inflation spike” after recession rocks the U.S., and former New York Fed President William Dudley said a U.S. economic downturn “is pretty likely.”

Read: Stock-market investors face 3 recession scenarios in 2023

“Recession is what everyone is betting on,” said Ben Emons, senior portfolio manager and head of fixed income/macro strategy at NewEdge Wealth in New York. “And, the thinking is, therefore inflation will decelerate faster than what people anticipate and the Federal Reserve could move quicker to a rate cut. But the whole narrative of a recession is something that’s bothering the stock market and other asset classes because it will mean shrinking margins and earnings.”

Indeed, a much-hoped for rally in stocks around this time of the year, known as the “Santa Claus rally,” is failing to materialize, with just one more trading session left on Wednesday before the end of that seasonal period. The in-house research arm of BlackRock Inc., the world’s largest asset manager, described recession as “foretold” on Tuesday and said it is “tactically underweight” developed-market stocks, which are still “not pricing the recession we see ahead.” That’s the case even though global stocks ended 2022 down by 18% and bonds fell 16%, said Jean Boivin, head of the BlackRock Investment Institute, and others.

Sources: BlackRock Investment Institute, Refinitiv, Bloomberg.

“We see stock rallies built on hopes for rapid rate cuts fizzling. Why? Central banks are unlikely to come to the rescue in recessions they themselves caused to bring inflation down to policy targets. Earnings expectations are also still not fully reflecting recession, in our view. But markets are now pricing in more of the damage we see – and as this continues, it would pave the way for us to turn more positive on risk assets,” Boivin and others at BlackRock Investment Institute wrote in a note Tuesday.

“Even with a recession coming, we think we are going to be living with inflation,” they said.

Interestingly, the financial market’s focus on a 2023 recession is being accompanied by the view that such a downturn will help cure inflation, allowing central banks to end, slow, or even reverse their monetary policy-tightening campaigns. That view was buttressed by Tuesday’s release of inflation data out of Germany, which showed that the annual rate from the consumer price index fell by more than expected in December to a four-month low. Back in the U.S., fed funds futures traders priced in a greater likelihood of a smaller-than-usual, 25-basis point rate hike by the Federal Reserve in February.

As of Tuesday afternoon, all three major U.S. stock indexes DJIA SPX were down, led by a 1.3% drop in the Nasdaq Composite.

Meanwhile, a rally in Treasurys moderated relative to earlier in the day. The 10-year Treasury yield
TMUBMUSD10Y,
3.785%,
a benchmark for borrowing costs, dropped back to levels last seen around Dec. 23-26, a period when conditions were “totally illiquid and no one was trading,” said Emons of NewEdge Wealth.

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January 3, 2023

After a rough 2022, U.S. stock futures muted ahead of first trading week of 2023

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U.S. stock-market futures were muted late Monday, ahead of the first trading day of 2023.

Dow Jones Industrial Average futures
YM00,
+0.14%
jumped more than 200 points out of the gate, but initial enthusiasm quickly waned. By midnight Eastern, they had given up those gains and were about flat; S&P 500 futures
ES00,
+0.17%
and Nasdaq-100 futures
NQ00,
+0.18%
were treading water, slightly in positive territory, after similarly shedding early gains.

On Friday, the Dow Jones Industrial Average
DJIA,
-0.22%
dipped 73.55 points, or 0.2%, to 33,147.25. The S&P 500
SPX,
-0.25%
lost 9.78 points, or 0.3%, to 3,839.50, while the Nasdaq Composite
COMP,
-0.11%
retreated 11.61 points, or 0.1%, to 10,466.48. All three major benchmarks suffered their worst year since 2008 based on percentage declines. The Dow dropped 8.8% in 2022, while the S&P 500 tumbled 19.4% and the tech-heavy Nasdaq plunged 33.1%.

See more: An interest-rate shock wrecked stocks in 2022. What pros say will drive the market in 2023.

U.S. markets were closed Monday in observance of the New Year’s holiday.

Investors are in for a busy shortened week, with a slew of economic data due, including S&P Global manufacturing PMI and construction spending expected Tuesday, the Job Openings and Labor Turnover Survey on Wednesday and the December jobs report due Friday. On Wednesday, the Fed will also release minutes from its latest meeting.

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January 2, 2023

After a rough 2022, U.S. stock futures inch higher ahead of first trading week of 2023

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U.S. stock-market futures inched higher Monday, suggesting slight gains ahead of the first trading day of 2023.

Dow Jones Industrial Average futures
YM00,
+0.19%
jumped more than 200 points out of the gate, but initial enthusiasm quickly waned. But 7 p.m. Eastern, they were up about 75 points, or 0.2%; S&P 500 futures
ES00,
+0.13%
and Nasdaq-100 futures
NQ00,
+0.05%
each rose about 0.2% as well

On Friday, the Dow Jones Industrial Average
DJIA,
-0.22%
dipped 73.55 points, or 0.2%, to 33,147.25. The S&P 500
SPX,
-0.25%
lost 9.78 points, or 0.3%, to 3,839.50, while the Nasdaq Composite
COMP,
-0.11%
retreated 11.61 points, or 0.1%, to 10,466.48. All three major benchmarks suffered their worst year since 2008 based on percentage declines. The Dow dropped 8.8% in 2022, while the S&P 500 tumbled 19.4% and the tech-heavy Nasdaq plunged 33.1%.

See more: An interest-rate shock wrecked stocks in 2022. What pros say will drive the market in 2023.

Markets were closed Monday in observance of the New Year’s holiday.

Investors are in for a busy shortened week, with a slew of economic data due, including S&P Global manufacturing PMI and construction spending expected Tuesday, the Job Openings and Labor Turnover Survey on Wednesday and the December jobs report due Friday. On Wednesday, the Fed will also release minutes from its latest meeting.

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January 2, 2023

I retired at 50, went back to work at 53, and then a medical issue left me jobless: ‘There’s no such thing as a safe amount of money’

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I had always said I was going to retire when I was 50. I had worked and saved since I was 16. Retiring without Medicare and Social Security is a scary thing. I wound up retiring then going back to work. At 53, I took a part-time job with a decent salary for the hours but I was sooooo bored. And then life rang my bell.

I had major medical problems. So major that when I was able to return to work they let me go because they didn’t think I could keep up with the workflow. They were probably right. Nobody else felt comfortable enough with my health issues to hire me. I applied for disability but was denied. I appealed and got my rejection to the appeal while I was in ICU. I appealed again and I was denied because they didn’t think anything changed from my original application.

I am assuming you can imagine what my savings is now. I took early retirement, with the penalty, because I needed income. $4,000 a month wouldn’t have put a dent in my prescriptions.

Everybody needs to know there’s no such thing as a safe amount of money set aside for retirement. Life happens and in the blink of an eye your whole life and everything you worked for can be gone.

See: I’m 68, my husband is terminally ill, and his $3 million estate will go to his son. I want to spend the rest of my days traveling – will I have enough money?

Dear reader,

I normally only feature letters with questions for this column, but your note was just so important for other readers that I had to respond — and let others see what you’ve shared.

I’m so very sorry that you experienced this. Wanting to retire early isn’t inherently wrong — so many people wish to do it, especially after decades of working. But without the proper planning, it could lead to despair, especially if an emergency occurs.

“Retiring early is a dream for many people,” said Landon Tan, a certified financial planner. “But those years of not working diminish your chance of a successful retirement more than almost any other metric we toggle when making financial plans.”

Retiring early means there are more years you need to be able to financially cover, and that requires money — a lot of it. When planning to retire early, those extra years need to be considered — at the forefront of retirement, but also in the back end if you live longer than anticipated.

“Today’s retirees are expecting their accumulated assets to work for them for 10-20 years longer than before,” said Glenn Downing, a certified financial planner and founder of CameronDowning. “Centenarians are no longer uncommon. For that to happen successfully, there needs to be more assets — simple as that.” Anyone should prepare to live longer than expected so their money does not outlast them, which can feel daunting.

Those missing years may also affect your Social Security benefits, which so many elderly Americans rely on for most of their retirement income. People retiring early should have a clear picture of what to expect from Social Security in the future, and how their plans may impact those expectations.

Leaving the workforce also means possibly losing out on participating in a group health plan, and I think we can say with certainty the pandemic has shown just how crucial health insurance can be in dire times.

You’re absolutely right: Retiring before Medicare is scary. Healthcare is expensive even without an emergency. Not everyone considers this expense when they’re dreaming about calling it quits in their 50s, but if they don’t have proper insurance lined up when they retire they could be blowing through their retirement budget quickly — or putting themselves in a very dangerous situation. Those years can feel long when Medicare eligibility only begins at age 65 for most Americans. And it also doesn’t take into consideration long-term care, which is an entirely other expense. Think nursing homes, home health aides and necessary medical equipment for daily activities.

Don’t miss: Retiring early this year? Look through Affordable Care Act plans now before the deadline Saturday

Knowing how much is enough to have saved for retirement is very difficult. There is no such thing as one “safe” number before you retire, but there are a few guidelines one can follow to find security in old age.

Part of that equation comes down to personal circumstance: how much you typically spent in your pre-retirement life, how much you anticipate spending in retirement, various financial factors like taxes and cost of housing and utilities, and so on. And as you have experienced — and considerately reminding others — major unexpected emergencies can absolutely derail any sort of financial security.

Another factor is what is available to you in your older years. I’ll get to that in a moment in hopes it may help you or others in similar situations.

Retirees tend to focus on short-term changes, which can cause them to be unprepared for what the future holds, a recent survey found. Many retirees just deal with these emergencies as they come, according to research from the Society of Actuaries. The organization found more than seven in 10 retirees have thought about how their lives will change in the following decades, but only 27% feel financially prepared for it.

More than half of the retirees in the survey said they could not afford more than $25,000 for an unexpected emergency without jeopardizing their retirement security. More than half of Black respondents and Latino respondents said they couldn’t afford to spend $10,000 for a financial shock.

“The world can change around you really quickly, and you need to be prepared for the change and to deal with change,” said Anna Rappaport, a member of the Society of Actuaries Research Institute’s Aging and Retirement Program. Americans didn’t often plan for the shocks life could bring before the pandemic, and that hasn’t necessarily changed since, she said. “The shocks were there before and the landscape just changed a little.”

Check out MarketWatch’s column “Retirement Hacks” for actionable pieces of advice for your own retirement savings journey

But you’re not alone. Many people have fallen into hard times before and during retirement, pandemic or no pandemic. You may already be exhausting all avenues, but this one retiree shared the steps he took when he lost his job at 58. He searched for another job for 18 months before taking one with a 40% pay cut, and had to live a lot leaner until he officially retired at age 64. That lifestyle included taking in a roommate, buying some household items at the dollar store and extreme meal planning. Here’s what he says about his retirement now.

If your medical condition allows, could you take on some part-time work, or find some ways to make money while working from home? Or could you possibly downsize where you live or take in a roommate?

I know you didn’t ask for any suggestions and I’m sure you’re already doing as much as you can to live comfortably, but there are plenty of resources you might want to consider if you haven’t already.

Have you explored any government benefits, such as assistance in costs for housing, heating or groceries? There are many federal and state programs available for seniors with needs for financial assistance — not just Supplemental Security Insurance and Medicaid, though of course those are the most prominently known.

AARP created a list of resources, broken up by state, and has its own services, such as helping people get back to work in their 50s and beyond. GoFundMe also has a list for financial assistance for older Americans. It includes options for housing, food, medicine and getting back into the workforce. States, and sometimes even individual cities, have departments and offices dedicated to aging issues, which you may want to try calling as well. There is help out there, even if it may not feel easy to find.

I wish you the best.

Readers: Do you have suggestions for this reader? Add them in the comments below.

Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

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December 31, 2022

The limit for 401(k) contributions will jump nearly 10% in 2023, but it’s not always a good idea to max out your retirement investments

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The federal government will allow you to save nearly 10% more for retirement in 2023. But it’s not likely that many will take advantage of the tax break. The simple reason: Most people don’t make enough money to save more from their paychecks.

The average amount that participants contribute is 7.3% of their salary, according to Vanguard’s How America Saves 2022 report. At that rate, you’d have to make more than $300,000 to hit the $22,500 maximum amount an employee can save in a workplace plan for 2023, up from $20,500 in 2022. To put it another way, to save the max, you’d have to put aside $1,875 per month, or $865 per paycheck if you’re paid biweekly.

Only 14% of participants saved the maximum amount in 2020.

Few people will also likely take advantage of the increase in the catch-up contribution limit, which will allow those 50 and older to contribute an extra $7,500, up by $1,000 from 2022, for a total of $30,000. Vanguard’s report found that only 16% of those eligible participate, even though 98% of plans allow for catch-up contributions.

“The max numbers are very high. A lot of people don’t make that kind of money,” says Anqi Chen, assistant director of savings research at the Center for Retirement Research at Boston College.

You might not need to max out

Not everyone needs that kind of money put away for retirement. The key is to save over time to eventually be able to replace your current income in the future, supplemented by Social Security. If you’re making $60,000 now, it wouldn’t make sense to try to save more than a third of your yearly income just because the government says you can.

“You don’t want to deprive yourself today or later on. You want to balance that over time, to be able to maintain the same standard of living in retirement,” says Chen.

The tried-and-true method to get people to contribute to retirement savings is a monetary incentive: matching funds. That “free money” on the table is at the base of every recommendation for how much workers should contribute. Give at least up to the match, everyone says. But almost all company retirement plans offer matching funds, and it hasn’t yet solved the retirement crisis facing most Americans who haven’t saved enough.

Trend in deferral rate changes

Vanguard 2022

If there’s a takeaway from the new IRS limits, it’s that pushing up the limits every year does help. Retirement contributions have been indexed for inflation since 2001 for good reason, because legislators recognized that the amount you need in the future is constantly going up.

Ten years ago, the maximum for 401(k) contributions was $17,000 and going back 30 years to 1992, it was $8,728. In today’s dollars, that certainly wouldn’t be enough.

At the same time, the government has to cap it somewhere to put a limit on tax deferral, so you can’t just shelter all your income from the IRS.

“These annual step-ups matter over time, because saving for retirement is a multidecade thing,” says David Stinnett, head of strategic retirement consulting for Vanguard.

His advice for those who can’t max out, particularly younger workers, is to at least contribute up to the company match and then automatically escalate your savings rate over time to something in the rage of 12% to 15%.

It can be helpful to think of the amounts in dollar terms, rather than percentages.

“By starting small and thinking of it as just ‘3 pennies per dollar’ earned and then adding ‘2 pennies per dollar’ each year going forward, you’ll get on track to those recommended savings rates in no time,” says Tom Armstrong, vice president of customer analytics and insight at Voya Financial.

Escalating over time does seem to move the needle, according to Vanguard’s study, at least if you look at the rate of people coming to the table. The voluntary participation rate was only 66%, but the participation rate for automatic enrollment was 93%.

“What that does is make it easy to save more,” says Stinnett.

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December 31, 2022

Sam Bankman-Fried Likely to Plead Not Guilty to Fraud Charges

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FTX founder Sam Bankman-Fried.

David Dee Delgado/Getty Images

FTX founder Sam Bankman-Fried is likely to plead not guilty to fraud and other charges at his arraignment next week, according to people familiar with the matter.

The U.S. attorney’s office for the Southern District of New York earlier this month charged Mr. Bankman-Fried with engaging in criminal conduct that contributed to the cryptocurrency exchange’s collapse, alleging that he oversaw one of the biggest financial frauds in American history. Mr. Bankman-Fried is likely to appear in person in New York to enter his plea on Jan. 3, one of the people said.

Before his arrest, Mr. Bankman-Fried blamed the loss of customer funds on sloppy record-keeping and a bank-account issue that allowed Alameda Research, an affiliated trading firm, to cover large losses with money destined for FTX. His not guilty plea was widely expected.

Mr. Bankman-Fried stands at odds with his associates—Caroline Ellison, the former chief executive of Alameda Research, and Gary Wang, FTX’s former chief technology officer—who both pleaded guilty to criminal offenses similar to those Mr. Bankman-Fried was charged with. Both are cooperating with federal investigators.

The collapse of FTX and its sister trading firm Alameda have rattled the nascent world of crypto. Prosecutors allege that Mr. Bankman-Fried took billions of dollars of FTX.com customer money to pay the expenses and debts of his trading firm Alameda Research. Both companies filed for bankruptcy last month. Individual traders who entrusted FTX with their crypto are likely facing lengthy bankruptcy proceedings before they have a chance at seeing any of their funds back.

Read the rest of this article in The Wall Street Journal.

Write to editors@barrons.com

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December 30, 2022

Stocks cement worst year since 2008 as S&P 500 logs 4th biggest drop since inception

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U.S. stocks polished off their worst year since 2008 with a loss on Friday, bringing the year-to-date decline for the S&P 500 to 19.4%, its largest calendar-year drop since 2008, Dow Jones Market Data show. The same holds true for the Dow Jones Industrial Average, which shed 8.8% this year, and the Nasdaq Composite, which lost 33.1%. On Friday, as stocks pared their losses heading into the close on the last session of the year, the S&P 500
SPX,
-0.25%
fell 9.78 points, or 0.2%, to finish at 3,839.50, while the Nasdaq Composite
COMP,
-0.11%
fell 11.61 points, or 0.1%, to 10,466.48, and the Dow
DJIA,
-0.22%
fell 73.55 points, or 0.2%, to 33,147.25. 2022 also marked the fourth-worst year for the S&P 500 since its inception in 1957. The only years where stocks fared worse were 2002, 1974 and 2008, according to DJMD. As previously high-flying megacap technology stocks and other interest-rate sensitive assets crumbled, value stocks outperformed this year, sending the Dow to its biggest calendar-year outperformance vs. the Nasdaq since 2000. The blue-chip gauge also recorded its biggest outperformance vs. the S&P 500 since the index’s creation. Energy stocks were a lone bright spot, as the S&P 500 energy sector recorded its best year on record with a 59% gain.

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December 30, 2022

These 20 stocks were the biggest losers of 2022

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This has been the year of reckoning for Big Tech stocks — even those of companies that have continued to grow sales by double digits.

Below is a list of the 20 stocks in the S&P 500
SPX,
-0.72%
that have declined the most in 2022.

First, here’s how the 11 sectors of the benchmark index have performed this year:

S&P 500 sector	2022 price change	Forward P/E	Forward P/E as of Dec. 31, 2021
Energy	57.8%	9.6	11.1
Utilities	-0.5%	18.8	20.4
Consumer Staples	-2.7%	20.9	21.8
Healthcare	-3.2%	17.4	17.2
Industrials	-6.7%	18.0	20.8
Financials	-12.1%	11.7	14.6
Materials	-13.4%	15.6	16.6
Real Estate	-27.7%	16.2	24.2
Information Technology	-28.8%	19.6	28.1
Consumer Discretionary	-37.4%	20.7	33.2
Communication Services	-40.4%	14.0	20.8
S&P 500	-19.2%	16.5	21.4
Source: FactSet

The energy sector has been the only one to show a gain in 2022, and it has been a whopper, even as West Texas Intermediate crude oil
CL.1,
+0.41%
has given up most of its gains from earlier in the year. Here’s why investors are still confident in the supply/demand setup for oil and energy stocks.

Looking at the worst-performing sectors, you might wonder why the consumer discretionary and communication services sectors have fared worse than information-technology, the core tech sector. One reason is that S&P Dow Jones Indices can surprise investors with its sector choices. The consumer discretionary sector includes Tesla Inc.
TSLA,
+0.70%
and Amazon.com Inc.
AMZN,
-1.17%,
which has fallen nearly 50% this year. The communications sector includes Meta Platforms Inc.
META,
-1.21%,
along with Match Group Inc.
MTCH,
+0.50%,
which is down 69% for 2022, and Netflix Inc.
NFLX,
-0.44%,
which is down 52% this year.

There have been many reasons easy to cite for Big Tech’s decline, such as a questionable change in strategy for Facebook’s holding company, Meta, as CEO Mark Zuckerberg has put so much of the company’s resources into developing a new world that most people don’t wish to enter, at least yet. Meta’s shares were down 64% for 2022 through Dec. 29.

You might also blame the Twitter-related antics and sales of Tesla shares by CEO Elon Musk for the 65% decline in the electric-vehicle maker’s stock this year. But Tesla had a forward price-to-earnings ratio of 120.3 at the end of 2021, while the S&P 500
SPX,
-0.72%
traded for 21.4 times its weighted forward earnings estimate, according to FactSet. Those P/E ratios have now declined to 21.7 and 16.4, respectively. So Tesla no longer appears to be a very expensive stock, especially for a company that increased its vehicle deliveries by 42% in the third quarter from a year earlier.

Analysts polled by FactSet expect Tesla’s stock to double during 2023. It nearly made this list of 20 EV stocks expected to rebound the most in 2023.

The worst-performing S&P 500 stocks of 2022

Here are the 20 stocks in the S&P 500 that fell the most for 2022 through the close on Dec. 29.

Company	Ticker	2022 price change	Forward P/E	Forward P/E as of Dec. 32, 2021
Generac Holdings Inc.	GNRC, -0.84%	-71.4%	13.7	30.2
Match Group Inc.	MTCH, +0.50%	-68.9%	20.1	48.5
Align Technology Inc.	ALGN, -0.52%	-67.7%	27.4	48.7
Tesla Inc.	TSLA, +0.70%	-65.4%	21.7	120.3
SVB Financial Group	SIVB, -0.38%	-65.4%	10.8	23.0
Catalent Inc.	CTLT, -0.40%	-64.6%	13.0	32.5
Meta Platforms Inc. Class A	META, -1.21%	-64.2%	14.7	23.5
Signature Bank	SBNY, -0.34%	-64.1%	6.2	18.6
PayPal Holdings Inc.	PYPL, -0.01%	-62.6%	14.8	36.0
V.F. Corp.	VFC, +0.15%	-62.5%	11.9	20.4
Warner Bros. Discovery Inc. Series A	WBD, -1.64%	-59.9%	N/A	7.5
Carnival Corp.	CCL, -0.23%	-59.8%	38.1	N/A
Stanley Black & Decker Inc.	SWK, -0.42%	-59.8%	17.0	15.9
Lumen Technologies Inc.	LUMN, -1.79%	-57.8%	7.7	7.8
Zebra Technologies Corp. Class A	ZBRA, -0.44%	-56.7%	14.5	30.1
Dish Network Corp. Class A	DISH, -0.96%	-56.5%	8.6	10.9
Caesars Entertainment Inc.	CZR, +0.24%	-55.7%	51.4	144.5
Lincoln National Corp.	LNC, +0.26%	-55.1%	3.4	6.2
Advanced Micro Devices Inc.	AMD, -0.97%	-55.0%	17.8	43.1
Seagate Technology Holdings PLC	STX, -0.55%	-53.1%	15.0	12.4
Source: FactSet

Click on the tickers for more information about the companies.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

Another way of measuring the biggest stock-market losers of 2022

It is one thing to have a large decline based on the share price, but that doesn’t tell the entire story. How much of a decline have investors seen in the holdings of their shares during the year? The S&P 500’s total market capitalization declined to $31.66 trillion as of Dec. 28 (the most recent figure available) from $40.36 trillion at the end of 2021, according to FactSet.

Shareholders of these companies have suffered the largest declines in market cap during 2022.

Company	Ticker	2022 market capitalization change ($bil)	2022 price change
Apple Inc.	AAPL, -0.63%	-$851	-27.0%
Amazon.com Inc.	AMZN, -1.17%	-$832	-49.5%
Microsoft Corp.	MSFT, -1.15%	-$728	-28.3%
Tesla Inc.	TSLA, +0.70%	-$677	-65.4%
Meta Platforms Inc. Class A	META, -1.21%	-$465	-64.2%
Nvidia Corp.	NVDA, -1.37%	-$376	-50.3%
PayPal Holdings Inc.	PYPL, -0.01%	-$141	-62.6%
Netflix Inc.	NFLX, -0.44%	-$138	-51.7%
Walt Disney Co.	DIS, -1.62%	-$123	-43.7%
Salesforce Inc.	CRM, -0.96%	-$118	-47.8%
Source: FactSet

So there is your surprise for today: Apple is this year’s biggest stock-market loser.

Don’t miss: Best stock picks for 2023: Here are Wall Street analysts’ most heavily favored choices

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December 30, 2022

China Regulator Says Futu, Up Fintech Violated Laws

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China Regulator Says Futu, Up Fintech Violated Laws

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December 30, 2022

These 20 stocks were the biggest winners of 2022

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Even during a year in which the S&P 500 index declined 19%, with 72% of its stocks in the red, there were plenty of winners.

Before showing you the list of the best performers in the benchmark index, let’s look at a preview: Here’s how the 11 sectors of the S&P 500
SPX,
-0.25%
performed for the year:

Index	2022 price change	Forward P/E	Forward P/E as of Dec. 31, 2021
Energy	59.0%	9.7	11.1
Utilities	-1.4%	18.9	20.4
Consumer Staples	-3.2%	21.0	21.8
Health Care	-3.6%	17.6	17.2
Industrials	-7.1%	18.3	20.8
Financials	-12.4%	11.9	14.6
Materials	-14.1%	15.8	16.6
Real Estate	-28.4%	16.5	24.2
Information Technology	-28.9%	20.1	28.1
Consumer Discretionary	-37.6%	21.3	33.2
Communication Services	-40.4%	14.3	20.8
S&P 500	-19.4%	16.8	21.4
Source: FactSet

Maybe you aren’t surprised to see that the energy sector was the only one to increase during 2022. But it might surprise you to see that despite the sector’s weighted price increase of 59%, its forward price-to-earnings ratio declined and remains very low relative to all other sectors.

It might also surprise you that West Texas Intermediate crude oil
CL.1,
+2.69%
gave up most of its gains from earlier in the year:

FactSet

The reason investors are still confident in energy stocks is that oil producers have remained cautious when it comes to capital spending. They don’t want to increase supply enough to cause prices to crash, as they did in the run-up to the summer of 2014, after which prices fell steadily through early 2016, causing bankruptcies and consolidation in the industry.

Now the oil companies are focusing on maintaining supply, raising dividends and buying back shares, as Occidental Petroleum Corp.’s
OXY,
+1.14%
chief executive explained in a recent interview with Matt Peterson. Click here for more about Occidental and the long-term supply/demand outlook for oil.

Best-performing S&P 500 stocks of 2022

Here are the 20 stocks in the benchmark index that rose most during 2022, excluding dividends. Proving that there are always exceptions, not all of them are in the energy sector.

Company	Ticker	Sector	Industry	2022 price change
Occidental Petroleum Corp.	OXY, +1.14%	Energy	Oil & Gas Production	117.3%
Hess Corp.	HES, +0.68%	Energy	Oil & Gas Production	91.6%
Marathon Petroleum Corp.	MPC, +0.18%	Energy	Oil Refining/ Marketing	81.9%
Exxon Mobil Corp.	XOM, +1.01%	Energy	Integrated Oil	80.3%
Schlumberger Ltd.	SLB, +1.04%	Energy	Contract Drilling	78.5%
APA Corp.	APA, +1.68%	Energy	Integrated Oil	73.6%
Halliburton Co.	HAL, +1.23%	Energy	Oil & Gas Production	72.1%
First Solar Inc.	FSLR, +0.68%	Information Technology	Semiconductors	71.9%
Valero Energy Corp.	VLO, +0.43%	Energy	Oil Refining/ Marketing	68.9%
Marathon Oil Corp.	MRO, +1.08%	Energy	Oil & Gas Production	64.9%
ConocoPhillips	COP, +1.38%	Energy	Oil & Gas Production	63.5%
Steel Dynamics Inc.	STLD, -0.72%	Materials	Steel	57.4%
EQT Corp.	EQT, -0.12%	Energy	Oil & Gas Production	55.1%
Chevron Corp.	CVX, +0.66%	Energy	Integrated Oil	53.0%
McKesson Corp.	MCK,	Health Care	Medical Distributors	50.9%
Cardinal Health Inc.	CAH, -0.46%	Health Care	Medical Distributors	49.3%
EOG Resources Inc.	EOG, +0.69%	Energy	Oil & Gas Production	45.8%
Enphase Energy Inc.	ENPH, -0.20%	Information Technology	Semiconductors	44.8%
Merck & Co. Inc.	MRK, +0.12%	Health Care	Pharmaceuticals	44.8%
Cigna Corp.	CI, +0.19%	Health Care	Managed Health Care	44.3%
Source: FactSet

Click on the tickers for more information about the companies.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

Don’t Miss: These 20 stocks were the biggest losers of 2022

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December 30, 2022

Surprise! CDs are back in vogue with Treasurys and I-bonds as safe havens for your cash

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If there’s a silver lining to the current economic situation that features soaring inflation and falling stocks, it’s that savers can get more for their money.

Even after just a few months of rising interest rates, you can find online savings accounts yielding more than 3%. But that might not be good enough anymore.

“Rather than being grateful for yield, that’s going to change quickly into turning your nose up at yield,” says Matt McKay, a certified financial planner and partner at Briaud Financial Advisors in College Station, Texas.

The Federal Reserve continued to raise rates through the end of 2022, and yields on savings products are now high enough that they look like a safe haven compared with a stock market that’s in the red this year.

And that means certificates of deposits, or CDs, are back in the conversation — even if that comes with caveats.

Advisers still favor Treasury bills and notes and Series I savings bonds for getting the best combination of low risk and high yield, but some are looking more seriously at CDs now. And for the everyday investor doing it on their own, CDs offer an additional boost beyond a savings account without much effort.

“It’s good for anyone if they have cash sitting around, if you can pick up something — CDs, T-bills, whatever — it’s good to get something,” says McKay.

Remember CDs?

If you’re under 50, you might never have invested in a CD and have no memory of how investors used to build ladders of different maturities as a cornerstone of their portfolio.

“With younger clients, nobody ever talks about CDs — never, never, never,” says Dennis Nolte, a certified financial planner and financial consultant at Seacoast Investment Services in Orlando, Fla.

For some, however, CDs never went out of style. These promissory notes from banks, which have been around in the U.S. since the 1800s, come in maturities generally from three months to five years, in exchange for interest at maturity.

You’re locked into the time period or face surrender charges that vary, unless you choose a more flexible, lower-interest option. The laddering strategy consists of buying CDs at different maturities and then reinvesting as they each come due.

Over the past few years, CDs haven’t been worth it for most savers, who could get as much from a high-yield savings account without restrictions. The average five-year CD would have nabbed you nearly 12% in 1984, but now the average five-year rate is just 0.74%, according to Bankrate.com. Back in 1984, CDs were nearly 50% of deposits at FDIC-insured banks, with $1.24 trillion held in the first quarter of that year. In 2022, there’s nearly the same dollar amount, which amounts to just 6.3% of deposits.

With rates rising, you can find better-than-average deals, closing in on 4% at some banks or brokerages. Many have a $1,000 minimum purchase, but you can find fractional offers for as little as $100.

CDs versus Treasurys and I-bonds

Treasury bills and notes come in roughly the same maturities as CDs, and are yielding slightly more currently. They also have no state tax burden on gains.

You can buy directly at TreasuryDirect.gov, with a $100 minimum, but to sell, you have to transfer holdings to a brokerage. Or you can buy and sell through a brokerage, but your minimums may be $1,000.

For I-bonds, you can only buy directly at TreasuryDirect.gov, with a minimum of $25 and a maximum of $10,000 per person a year, with gifts allowed to others up to $10,000 per recipient. I-bonds are indexed for inflation, with rates that reset every six months, and today are yielding 6.89% through April 2023. The biggest caveat is that you are locked into one year, and then face a surrender penalty of three months of interest if you cash out before five years.

A strategy for today’s rising rates

If you are chasing yield and have money you don’t need for a year, then I-bonds are the place for the first $10,000.

“It makes sense to max out I-bonds before investing in CDs,” says Ken Tumin, founder of DepositAcccounts.com.

Just make sure you’re motivated enough to navigate a still-wonky website and keep track of the investment on your own, because it won’t align with any of your other accounts. McKay had a client who was eager to jump into I-bonds, and he was mad at first that McKay hadn’t recommended it. “But then he called to complain, saying this is terrible, it’s so difficult,” he says.

If you have funds beyond that for savings, consider Treasury bills or notes because the rates are higher, says Tumin. Then consider CDs. That’s what Nolte is doing with some clients, particularly older ones who have past experience with them.

“Why not get something guaranteed? It’s maybe not keeping pace with inflation, but you’re not losing principal,” says Nolte.

CD rates move more slowly than other products, so even after the next rate hike, this strategy would still apply. But already Tumin sees investors ready to lock into long-term CDs, anticipating a recession and a drop in interest rates. If rates subsequently fall, and CDs lag, they would eventually end up with a price advantage over Treasury investments. Then people like McKay will be advising clients to buy in earnest.

“That’s when CDs become most attractive — as soon as rates peak or there are cuts [in rates],” says McKay.

Got a question about the mechanics of investing, how it fits into your overall financial plan and what strategies can help you make the most out of your money? You can write me at beth.pinsker@marketwatch.com.

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December 30, 2022

U.S. stocks close sharply higher in year-end rally after jobless claims data deemed ‘welcome news for the Fed’

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U.S. stock indexes finished sharply higher on Thursday, the second-to-last trading session of the year, with the Nasdaq Composite jumping 2.6%, erasing losses from earlier in the week.

The three main indexes built on premarket gains after U.S. weekly jobless claims data showed the number of workers receiving benefits has climbed to the highest level since February, a tentative sign that the Federal Reserve’s interest-rate hikes might be slowing economic growth and inflation.

How stocks traded

The S&P 500
SPX,
+1.75%
rose 66.06 points, or 1.8%, to end at 3,849.28.
Dow Jones Industrial Average
DJIA,
+1.05%
added 345.09 points, or 1.1%, finishing at 33,220.80.
Nasdaq Composite
COMP,
+2.59%
climbed 264.80 points, or 2.6%, to finish at 10,478.09.

On Wednesday, the Nasdaq Composite dropped 1.4% to 10,213, its lowest closing level of the year. The S&P 500 is up more than 6% from its 2022 low from mid-October, but the large-cap index remains down 19.2% year-to-date, FactSet data show.

What drove markets

The penultimate session of 2022 showed tentative signs of delivering some much needed festive cheer for the stock market as a hope for “Santa Claus rally” had earlier failed to materialize.

MarketWatch Live: Is that you, Santa Claus?

Stocks advanced on Thursday as data showed the number of Americans receiving more than a single week of unemployment benefits had climbed by 41,000 last week to 1.71 million, the highest level in 10 months.

The jobless-claims data “points to a loosening in the labor market, which is welcome news for the Fed,” said Larry Adam, chief investment officer at Raymond James, in a tweet.

However, analysts at Citi still think the claims data indicates a still-very-tight labor markets compared to historical levels.

“While both initial and continuing claims increased this week, they remain within the levels of late 2019,” wrote Gisela Hoxha, U.S. economics research analyst at Citi. “Anecdotes of company layoffs have increased in recent months, particularly in the tech sector. While it could be hard to disentangle the seasonal effects from the announced layoffs, in our view there is no significant evidence of them showing up in the claims data yet.”

Some of those layoffs could be taking effect a couple months later as employees might be kept on payroll for some time after the announcement, which will become significant signs of weakness in the labor market in 2023, Hoxha added.

See: Did 2022 break Wall Street’s ‘fear gauge’? Why the VIX no longer reflects the sorry state of the stock market

Stocks were on track to finish what’s set to be the worst year since 2008 not far from 2022 lows. The S&P 500’s 52-week closing low at 3,577.03 was hit on Oct. 12.

Still, the three indexes managed to erase losses from earlier in the week on Thursday. Nasdaq Composite was down 0.2% this week, while the S&P 500 gained 0.1% and the Dow was nearly flat as of Thursday’s close. If the S&P 500 can hold on to weekly gains through Friday, it would mark the end of a three-week losing streak that has been the index’s longest since September, FactSet data show.

Companies in focus

Tesla Inc.
TSLA,
+8.08%
shares finished 8.1% higher on Thursday after posting its first rise in eight sessions Wednesday. The electric-vehicle maker’s shares had declined in seven consecutive sessions, their worst losing streak since a seven-session run that ended on Sept. 15, 2018.
Southwest Airlines
LUV,
+3.70%
remains in focus as the airline tries to recover from logistical issues that caused thousands of flight cancellations over the past week. The stock fell 11% over the past two days, but rose 3.7% in Thursday session.
General Electric’s
GE,
+2.17%
spinoff of GE HealthCare Technologies will join the S&P 500 index when it begins trading as a separate public company on Jan. 4. GE HealthCare will replace Vornado Realty Trust
VNO,
+1.63%,
which will move to the S&P MidCap 400. Vornado will replace logistics company RXO
RXO,
+8.39%,
which will move to the S&P SmallCap 600. GE HealthCare — trading on a when-issued basis — rose 0.9%, while Vornado gained 1.6% and RXO jumped 8.4%.
Cal-Maine
CALM,
-14.50%
shares ended 14.5% lower after its quarterly earnings came in below Wall Street forecasts. Cal-Maine reported record sales for the quarter as an avian flu outbreak continued to limit the supply of eggs, driving prices sharply higher. The company also said there were no positive tests for avian flu at any of its production facilities, as of Wednesday.

— Jamie Chisholm contributed to this article

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December 29, 2022

U.S. stocks close sharply higher in year-end rally after jobless claims data deemed ‘welcome news for the Fed’

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U.S. stock indexes finished sharply higher on Thursday, the second-to-last trading session of the year, with the Nasdaq Composite jumping 2.6%, erasing losses from earlier in the week.

The three main indexes built on premarket gains after U.S. weekly jobless claims data showed the number of workers receiving benefits has climbed to the highest level since February, a tentative sign that the Federal Reserve’s interest-rate hikes might be slowing economic growth and inflation.

How stocks traded

The S&P 500
SPX,
+1.75%
rose 66.06 points, or 1.8%, to end at 3,849.28.
Dow Jones Industrial Average
DJIA,
+1.05%
added 345.09 points, or 1.1%, finishing at 33,220.80.
Nasdaq Composite
COMP,
+2.59%
climbed 264.80 points, or 2.6%, to finish at 10,478.09.

On Wednesday, the Nasdaq Composite dropped 1.4% to 10,213, its lowest closing level of the year. The S&P 500 is up more than 6% from its 2022 low from mid-October, but the large-cap index remains down 19.2% year-to-date, FactSet data show.

What drove markets

The penultimate session of 2022 showed tentative signs of delivering some much needed festive cheer for the stock market as a hope for “Santa Claus rally” had earlier failed to materialize.

MarketWatch Live: Is that you, Santa Claus?

Stocks advanced on Thursday as data showed the number of Americans receiving more than a single week of unemployment benefits had climbed by 41,000 last week to 1.71 million, the highest level in 10 months.

The jobless-claims data “points to a loosening in the labor market, which is welcome news for the Fed,” said Larry Adam, chief investment officer at Raymond James, in a tweet.

However, analysts at Citi still think the claims data indicates a still-very-tight labor markets compared to historical levels.

“While both initial and continuing claims increased this week, they remain within the levels of late 2019,” wrote Gisela Hoxha, U.S. economics research analyst at Citi. “Anecdotes of company layoffs have increased in recent months, particularly in the tech sector. While it could be hard to disentangle the seasonal effects from the announced layoffs, in our view there is no significant evidence of them showing up in the claims data yet.”

Some of those layoffs could be taking effect a couple months later as employees might be kept on payroll for some time after the announcement, which will become significant signs of weakness in the labor market in 2023, Hoxha added.

See: Did 2022 break Wall Street’s ‘fear gauge’? Why the VIX no longer reflects the sorry state of the stock market

Stocks were on track to finish what’s set to be the worst year since 2008 not far from 2022 lows. The S&P 500’s 52-week closing low at 3,577.03 was hit on Oct. 12.

Still, the three indexes managed to erase losses from earlier in the week on Thursday. Nasdaq Composite was down 0.2% this week, while the S&P 500 gained 0.1% and the Dow was nearly flat as of Thursday’s close. If the S&P 500 can hold on to weekly gains through Friday, it would mark the end of a three-week losing streak that has been the index’s longest since September, FactSet data show.

Companies in focus

Tesla Inc.
TSLA,
+8.08%
shares finished 8.1% higher on Thursday after posting its first rise in eight sessions Wednesday. The electric-vehicle maker’s shares had declined in seven consecutive sessions, their worst losing streak since a seven-session run that ended on Sept. 15, 2018.
Southwest Airlines
LUV,
+3.70%
remains in focus as the airline tries to recover from logistical issues that caused thousands of flight cancellations over the past week. The stock fell 11% over the past two days, but rose 3.7% in Thursday session.
General Electric’s
GE,
+2.17%
spinoff of GE HealthCare Technologies will join the S&P 500 index when it begins trading as a separate public company on Jan. 4. GE HealthCare will replace Vornado Realty Trust
VNO,
+1.63%,
which will move to the S&P MidCap 400. Vornado will replace logistics company RXO
RXO,
+8.39%,
which will move to the S&P SmallCap 600. GE HealthCare — trading on a when-issued basis — rose 0.9%, while Vornado gained 1.6% and RXO jumped 8.4%.
Cal-Maine
CALM,
-14.50%
shares ended 14.5% lower after its quarterly earnings came in below Wall Street forecasts. Cal-Maine reported record sales for the quarter as an avian flu outbreak continued to limit the supply of eggs, driving prices sharply higher. The company also said there were no positive tests for avian flu at any of its production facilities, as of Wednesday.

— Jamie Chisholm contributed to this article

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December 29, 2022

These 20 energy stocks are worth a look if you think oil prices will soar in 2023

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Harris Kupperman, the president of Praetorian Capital, made a couple of interesting calls heading into 2022. He predicted that stocks of the giant tech-oriented companies that led the bull market would be sold off, and that oil prices would continue to rise through the end of 2022.

The first prediction came true, while the second one for oil prices fizzled. After rising to $130 in March, oil prices have fallen back to where they started the year. Then again, that second prediction still could have made you a lot of money because the share prices of oil companies kept rising anyway.

That leads to a new prediction for 2023 and a related stock screen below.

Here’s a chart showing the movement of front-month contract prices for West Texas Intermediate (WTI) crude oil
CL.1,
-0.62%
since the end of 2021:

FactSet

Even though Kupperman didn’t get his oil price call right, the energy sector of the S&P 500
SPX,
-1.20%
was up 60% for 2022 through Dec. 27, excluding dividends. That is the only one of the 11 S&P 500 sectors to show a gain in 2022. And the energy sector is also cheapest relative to earnings expectations, with a forward price-to-earnings ratio of 9.8, compared with 16.7 for the full S&P 500.

WTI pulled back from its momentary peak at $130.50 in early March, but that didn’t reverse the long-term trend of low capital spending by oil and natural gas producers, which has given investors confidence that supplies will remain tight.

Vicki Hollub, the CEO of Occidental Petroleum Corp.
OXY,
-3.50%
— the best-performing S&P 500 stock of 2022 — said during a recent interview that there was “no pressure to increase production right now,” citing a $40 per barrel break-even point for oil prices.

Kupperman now expects strong demand and low supplies to push oil as high as $200 a barrel in 2023.

At the end of November, these 20 oil companies stood out as reasonable plays for 2023 based on expectations for free-cash-flow generation and dividend payments.

For this next screen, we are only looking at ratings and consensus price targets among analysts polled by FactSet.

There are 23 energy stocks in the S&P 500, and you can invest in that group easily by purchasing shares of the Energy Select SPDR ETF
XLE,
-2.24%.
We can expand the list of large-cap names by looking at the components of the iShares Global Energy ETF
IXC,
-1.91%,
which holds all the energy stocks in the S&P 500 plus large players based outside the U.S.

The top five holdings of IXC are:

Company	Ticker	Country	% of portfolio	Share “buy” ratings	Dec. 27 price	Price target	Implied 12-month upside potential
Exxon Mobil Corp.	XOM, -1.64%	U.S.	16.4%	54%	110.19	118.89	7.89%
Chevron Corp.	CVX, -1.48%	U.S.	11.5%	54%	179.63	190.52	6.06%
Shell PLC	SHEL, -0.70%	U.K.	7.8%	83%	23.67	29.82	25.99%
TotalEnergies SE	TTE, -1.40%	France	5.6%	62%	59.63	64.40	8.00%
ConocoPhillips	COP, -2.67%	U.K.	5.4%	83%	118.47	140.84	18.88%
Source: FactSet

Prices on the tables in this article are in local currencies.

IXC holds 51 stocks. To expand the list for a stock screen, we added the energy stocks in the S&P 400 Mid Cap Index
MID,
-1.24%
and the S&P Small Cap 600 Index
SML,
-1.89%
to bring the list up to 91 companies, which we then pared to 83 covered by at least five analysts polled by FactSet.

Here are the 20 companies in the list with at least 75% “buy” or equivalent ratings that have the most upside potential over the next 12 months, based on consensus price targets:

Company	Ticker	Country	Share “buy” ratings	Dec. 27 price	Price target	Implied 12-month upside potential
EQT Corp.	EQT, -7.82%	U.S.	83%	36.34	59.14	63%
Green Plains Inc.	GPRE, -2.72%	U.S.	80%	29.80	43.40	46%
Cameco Corp.	CCO, +0.33%	Canada	100%	30.48	44.25	45%
Talos Energy Inc.	TALO, -8.40%	U.S.	86%	19.77	28.67	45%
Ranger Oil Corp. Class A	ROCC, -6.22%	U.S.	100%	41.33	58.00	40%
Tourmaline Oil Corp.	TOU, -4.92%	Canada	100%	71.40	98.83	38%
Civitas Resources Inc.	CIVI, -4.06%	U.S.	100%	58.82	80.83	37%
Inpex Corp.	1605, -2.08%	Japan	88%	1,477.00	1,965.56	33%
Diamondback Energy Inc.	FANG, -2.26%	U.S.	84%	137.58	181.90	32%
Santos Limited	STO, -3.12%	Australia	100%	7.20	9.26	29%
Matador Resources Co.	MTDR, -3.98%	U.S.	79%	57.59	73.75	28%
Targa Resources Corp.	TRGP, -2.63%	U.S.	95%	73.89	94.05	27%
Cenovus Energy Inc.	CVE, -2.55%	Canada	84%	26.24	33.22	27%
Shell PLC	SHEL, -0.70%	U.K.	83%	23.67	29.82	26%
Ampol Limited	ALD, -2.89%	Australia	85%	28.29	35.01	24%
EOG Resources Inc.	EOG, -3.54%	U.S.	79%	132.08	157.52	19%
ConocoPhillips	COP, -2.67%	U.S.	83%	118.47	140.84	19%
Repsol SA	REP, -0.66%	Spain	75%	15.05	17.88	19%
Halliburton Co.	HAL, -3.03%	U.S.	86%	39.27	45.95	17%
Marathon Petroleum Corp.	MPC, -1.97%	U.S.	76%	116.82	132.56	13%
Source: FactSet

Click on the tickers for more information about the companies.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

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December 28, 2022

Tag: securities

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