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Weekly Market Pulse

| January 02, 2023

The S&P 500 index edged down 0.1% in the final week of 2022, a year that saw the market benchmark lose more than 19% amid rising inflation and interest rates.

The S&P 500 ended at 3,839.50 on Friday, the final trading session of the year, down from last week's closing level of 3,844.82. This put the index down 5.9% for December, the last month of a tumultuous year in which the S&P 500 recorded its largest yearly loss since 2008. The index fell in seven of the 12 months of 2022.

Last week's slight move came in just four sessions on light trading volume. The market was closed on Monday in observance of Christmas Day and many traders remained on a holiday break on the days the market was open.

The year's decline came amid rising inflation that prompted the Federal Reserve's Federal Open Market Committee to boost its benchmark lending rate several times, sparking worries that the rising rates may lead to a recession. Investors have been hoping the rate increases would slow, yet at its final meeting of the year earlier last month, the FOMC raised its median rate outlook. Investors are thus looking at 2023 with some trepidation.

Every sector except energy fell this year. Communication services suffered the largest percentage loss in 2022, tumbling 40%, followed by a 38% slide in consumer discretionary and a 29% drop in technology. Energy, meanwhile, jumped 59%.

For the week, every sector except financials and energy declined. Materials had the largest percentage drop, down 1.2%, followed by a 0.9% decline in consumer staples and drops of 0.6% each in utilities and real estate. On the upside, financials rose 0.7% and energy edged up 0.6%.

The decliners in the materials sector included Mosaic (MOS), which shed 2.8% last week. The agriculture supply company reported its potash revenue for October and November rose from the same period a year earlier, but its phosphate revenue declined. The company also cut its guidance for Q4 total potash volumes as well as Q4 phosphate sales volumes.

The financial sector's gainers included banks including Bank of America (BAC) and Citigroup (C) as analysts at Oppenheimer said the near-term outlook on the sector is "steadier than most think" and the US banking industry is less risky than at any other time since the firm launched its coverage in 1985. Shares of Bank of America rose 2% on the week while Citigroup added 2.2%.

The US stock market will be closed on Monday in observance of New Year's Day. On Tuesday and Wednesday, investors will receive some manufacturing and construction data, but much of the market's attention will likely be on the expected release Wednesday afternoon of minutes from the latest FOMC meeting, while looking ahead to December employment data coming Thursday and Friday. ADP will release its private sector December employment data on Thursday while the US government's December nonfarm payrolls and unemployment rate are expected on Friday.

Provided by MT Newswires