Some early Wednesday gains sparked hope that markets might just get a Santa Claus rally after all. Any optimism was quickly dashed, however, as the major market indexes turned lower in light trading after the latest housing data fanned fears of a potential recession in the new year.
Looking at the economic data, the National Association of Realtors this morning said that pending home sales were down 4% month-over-month in November, marking their sixth straight decline. "The November level of pending homes sales plummeted close to pandemic lows as the housing market cools," says Jeffrey Roach, chief economist at LPL Financial. "As a leading indicator for the residential real estate market, low pending home sales should inform investors that we have not likely seen the bottom."
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And it wasn't just the dismal housing data that had stocks reversing lower today. "The market appears to be exhausted, understandably, no longer expecting a large technical rally and just hoping to get to Friday afternoon without any further meaningful losses," says Louis Navellier, chairman and founder of Navellier & Associates. "Most of the year's major uncertainties: China COVID, the war in Ukraine, tight energy supplies, and hawkish central banks, will be waiting for us on the other side."
The tech-heavy Nasdaq Composite once again led the path down, shedding 1.4% to 10,213, as index heavyweights Apple (AAPL, -3.1%) and Amazon.com (AMZN, -1.5%) declined. The broader S&P 500 Index (-1.2% at 3,783) and the blue-chip Dow Jones Industrial Average (-1.1% at 32,875) also ended in the red.
Why Investors Should Be Watching Buffett
One notable advancer today was Tesla (TSLA), which rebounded 3.3% after Tuesday's brutal selloff. But while Tesla stock is on pace to end 2022 down by nearly 68%, it remains "a perennial favorite among investors," says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, in recapping some of the biggest share price moves of the past year.
The analyst adds that Meta Platforms (META) is another previous highflier that has dramatically lost value in 2022. "[B]ut some investors will have been buying [META stock] to capitalize on the share drop in the hope its fortunes will turn around as the company restructures."
As for those that have artfully maneuvered the extreme stock market volatility of 2022, Streeter points to Warren Buffett's Berkshire Hathaway (BRK.B). The holding company "remains a top pick for investors hoping the steady hand of the Sage of Omaha will see them through any storms ahead." Buffett and his lieutenants did a lot of bargain hunting in 2022 as the equities market plummeted. Berkshire increased exposure to energy stocks by boosting stakes in Occidental Petroleum (OXY) and Chevron (CVX), and added to its tech sector bets via a third-quarter purchase of Taiwan Semiconductor (TSM) shares. To see the other stocks Buffett & Co. feel are worth their time, check out the entire Berkshire Hathaway equity portfolio.
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