Some early Wednesday gains raised hopes that markets might finally get a rally from Santa Claus. However, any optimism was quickly dashed as major equity indices fell in light trading after the latest housing data stoked fears of a possible recession in the new year.
Given the economic data, the National Association of Realtors (opens in a new tab) this morning said pending home sales fell 4% month-over-month in November, marking their sixth consecutive decline. “The November level of pending home sales has fallen near pandemic lows as the housing market cools,” said Jeffrey Roach, chief economist at LPL Financial. “As a leading indicator for the residential real estate market, weak pending home sales should let investors know that we probably haven’t seen bottom.”
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And it wasn’t just the dismal housing data that dragged stocks down today. “The market looks understandably exhausted, no longer expecting a big technical rally and just hoping to get into Friday afternoon without another significant loss,” said Louis Navellier, president and founder of Navellier & Associates. “Most of the major uncertainties of the year: COVID-19 in China, war in Ukraine, limited energy supplies and hawkish central banks, will be waiting for us on the other side.”
The tech-heavy Nasdaq Compound once again led the way lower, losing 1.4% to 10,213, as index heavyweights Apple (AAPL (opens in a new tab)-3.1%) and Amazon.co.uk (AMZN (opens in a new tab), -1.5%) decreased. The largest S&P 500 Index (-1.2% to 3,783) and blue chips Dow Jones Industrial Average (-1.1% to 32,875) also ended in the red.
Why Investors Should Watch Buffett
Significant progress today has been You’re here (TSLA (opens in a new tab)), which rebounded 3.3% after Tuesday’s brutal sale. But at the same time Tesla Stock is set to end 2022 nearly 68% down, it remains “a perennial investor favourite,” says Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, recapping some of the biggest price moves in shares of the past year.
The analyst adds that Metaplatforms (META (opens in a new tab)) is another previous highflier that has lost significant value in 2022.”[B]but some investors will have bought [META stock] capitalize on the stock’s decline in the hope that his fortunes will recover as the company restructures.”
As for those who skillfully maneuvered the extreme stock market volatility of 2022, Streeter points to Warren Buffett Berkshire Hathaway (BRK.B (opens in a new tab)). The holding company “remains a top choice for investors hoping that the steady hand of the Sage of Omaha will see them through the storms to come.” Buffett and his lieutenants did a lot of bargain hunting in 2022 as the stock market crashed. Berkshire increased its exposure to energy stocks by strengthening of stakes in Occidental Petroleum (OXY) and Chevron (CLC (opens in a new tab)), and added to its bets on the technology sector via a third-quarter purchase of Taiwan Semiconductor (TSM) shares. To see what other stocks Buffett & Co. think are worthwhile, check out the full Berkshire Hathaway Stock Portfolio.