Stock Market Today: Stocks Stumble on Downbeat Data, Recession Fears

Stocks kicked off the first trading day of the new year in much the same fashion as they closed out 2022 – with broad-based declines on comparatively light volume.

Some downbeat economic data (opens in new tab) and a gloomy outlook from the International Monetary Fund weighed on sentiment Tuesday, while steep selloffs in key names likewise did the equity markets no favors.

It was a light day for economic news, but what the market did get, it sure didn't like. U.S. manufacturing activity continued to contract in December, with operating conditions deteriorating at the fastest pace since the height of the COVID-19 pandemic in May 2020, according to the S&P Global U.S. Manufacturing Purchasing Managers' Index (opens in new tab). 

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"The manufacturing sector posted a weak performance as 2022 was brought to a close, as output and new orders contracted at sharper rates," said Siân Jones, senior economist at S&P Global Market Intelligence. "Demand for goods dwindled as domestic orders and export sales dropped." 

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In another blow to market participants' mood, the head of the International Monetary Fund warned that 2023 was ripe for widespread economic pain.

"We expect one-third of the world economy to be in recession (opens in new tab)," said Kristalina Georgieva, managing Director of the IMF, in an interview with CBS (opens in new tab). "Why? Because the three big economies, U.S., E.U., China, are all slowing down simultaneously."

At the single-stock level, Apple (AAPL (opens in new tab), -3.7%) sold off sharply on continued worries about iPhone 14 shipments (opens in new tab) amid the COVID-19 outbreak sweeping across China. As the largest company by market capitalization, AAPL did damage to all three major indexes. 

Meanwhile, shares in Tesla (TSLA (opens in new tab), -12.2%) continued to plunge after the electric vehicle company delivered fewer cars during the final three months of 2022 than analysts had forecast. Worries about weakening demand for Tesla vehicles (opens in new tab), particularly in China, have contributed to a long period of weakness in the stock. 

At the closing bell, the blue-chip Dow Jones Industrial Average was down less than 0.1% at 33,136, while the broader S&P 500 fell 0.4% to finish at 3,824. The tech-heavy Nasdaq Composite declined 0.8% to end at 10,386. 

Dividends and Defense for 2023

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The best stocks for a bear market (opens in new tab) should serve investors well while markets remain in a funk, as should the best ETFs for a bear market (opens in new tab). And don't forget that blue-chip dividend stocks – notably the best Dow dividend stocks (opens in new tab) – have a history of outperforming the broader market when times are tough.

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Be sure to check out the full list of the 65 best dividend stocks you can count on for 2023 (opens in new tab).