Stock futures edge higher heading into final trading week of 2022

Traders work on the floor of the New York Stock Exchange (NYSE), November 29, 2022.

Brendan McDermid | Reuters

U.S. stock futures edged higher on Monday night as investors head into the final trading days of 2022, mulling whether a Santa rally will emerge and lift a market that has been weighed down by recession fears.

Dow Jones Industrial Average futures rose 157 points, or 0.47%. S&P 500 and Nasdaq 100 futures advanced 0.61 percent and 0.73 percent, respectively.

In Friday’s regular session, the Dow Jones Industrial Average closed up 176 points, or 0.5%. The S&P 500 rose 0.6% and the Nasdaq Composite added 0.2%.

Friday marked the beginning of the Santa rally time that is generally considered to be the last five-day trading period in the current year, as well as the first two trading days in the new year. The markets were closed on Monday for the Christmas holidays.

Due to low trading volumes, investors expect either a relative lull or additional volatility during the holiday-shortened week. The markets are end of month and year defined by the surge in recession fears.

In December, the S&P 500 fell roughly 5.8%, while the Dow and Nasdaq fell about 4% and 8.5%, respectively. These are the biggest monthly declines since September. The major averages are heading for their worst annual performance since 2008.

“[The] The question of what kind of recession remains unanswered,” wrote Quincy Crosby, chief global strategist at LPL Financial, on Friday. “And for that, the answer is largely dictated by how much more the Fed needs to raise interest rates to finally address sticky inflation.”

On the economic front, traders await the latest data on November wholesale inventories and October S&P/Case-Shiller home prices on Tuesday before the bell.

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