Stocks gave up an early gain and ended lower Tuesday, a lackluster first trading day of 2023 for Wall Street just days after it closed the books on its worst year since 2008.
Flags adorn the facade of the New York Stock Exchange, Wednesday, June 16, 2021.
Long-term bond yields fell significantly. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.77% from 3.88% late Friday. Stock and bond markets were closed Monday for the observed New Year’s Day holiday. Inflation is easing, but remains stubbornly hot, which has prompted the Federal Reserve to keep raising interest rates to slow economic growth. That has left Wall Street bracing for the recession and higher unemployment that could result from those policies.
Investors are also looking ahead this week to several updates on the employment market, which has been a strong area of the broader economy. That has helped buffer the economy from a recession, analysts have said, but it also makes the Fed’s fight against inflation more difficult and raises that risk that it could go too far and bring on a recession.
Wall Street is also waiting on the latest round of corporate earnings reports, which will start flowing heavily around the middle of January. Analysts polled by FactSet expect earnings for companies in the S&P 500 to broadly slip during the fourth quarter and remain flat for the first half of 2023.
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