Some early-morning gains on Wednesday raised hopes that the markets might get a Santa rally after all. Any optimism was quickly dashed, however, as major market indexes edged lower in light trade after the latest housing data fueled fears of a possible recession in the new year.
Looking at the economic data, the National Association of Real Estate Brokers (opens in a new tab) this morning said pending home sales fell 4% month over month in November, marking their sixth straight decline. “November’s level of pending home sales fell near pandemic lows as the housing market cooled,” said 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 likely haven’t seen the bottom.”
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And it wasn’t just dismal housing data that sent stocks lower today. “The market seems to be understandably exhausted, no longer expecting a big technical rally and just hoping to get to Friday afternoon without further significant losses,” says Louis Navellier, chairman and founder of Navellier & Associates. “Most of the year’s major uncertainties — China COVID, the war in Ukraine, energy supply adjustments and hawkish central banks — will be waiting for us on the other side.”
The technological heavyweight Nasdaq Composite once again led the way down, down 1.4% to 10,213, as index heavyweights Apple (AAPL (opens in a new tab)-3.1%) and Amazon.com (AMZN (opens in a new tab), -1.5%) decreased. The wider S&P 500 index (-1.2% in 3,783) and the blue-chip Dow Jones Industrial Average (-1.1% at 32,875) also finished in the red.
Why Investors Should Be Watching Buffett
A remarkable advance today was Tesla (TSLA (opens in a new tab)), which rebounded by 3.3% later Tuesday’s brutal sale. But while Tesla shares is about to end 2022 up almost 68%, remains “a perennial favorite among investors,” says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, recapping some of the biggest share price moves of the past year .
The analyst adds that Metaplatforms (GOAL (opens in a new tab)) is another previous model that has lost value dramatically in 2022.”[B]but some investors would have to be buying [META stock] to capitalize on falling shares in the hope that their fortunes will change as the company restructures.”
As for those who deftly maneuvered the extreme stock market volatility of 2022, Streeter points to Warren Buffett’s argument. Berkshire Hathaway (BRK.B (opens in a new tab)). The holding company “remains one of the top investors hoping the steady hand of the Sage of Omaha will see them through whatever storms lie ahead.” Buffett and his lieutenants looked for plenty of bargains in 2022 as the stock market plummeted. Berkshire increased exposure to energy stocks by increased holdings in Occidental Petroleum (OXY) e Chevron (CVX (opens in a new tab)), and added to his bets on the technology sector via a purchase of shares of Taiwan Semiconductor (TSM) in the third quarter. To see the other stocks that Buffett & Co. consider them worthwhile, see the whole thing Berkshire Hathaway Securities Portfolio.