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With just two trading sessions left in 2022, cautious action continued to dominate Wall Street on Wednesday. The major averages all fell more than 1%, as energy stocks led a broad-based retreat.
The Nasdaq Composite (COMP.IND) finished -1.4%, the S&P 500 (SP500) closed -1.2% and the Dow (DJI) ended -1.1%.
The S&P 500 dropped 46.03 points to close at 3,783.22. This represented the index's first close below the 3,800 mark since Nov. 9. Meanwhile, the Dow Jones retreated 365.85 points to end at 32,875.71 and the Nasdaq declined 139.94 points to conclude trading at 10,213.29.
All 11 S&P sectors posted losses, led by a 2.2% drop in Energy. Communication Services, Info Tech, Materials and Real Estate each finished lower by at least 1.5%.
"With long-duration treasury bond yields continuing their run higher, technology stocks were especially weak in a broadly red tape today. Apple (AAPL) is a market general, and a breakdown of its June lows is an ominous sign for broader indices," contributor Ahan Vashi, of the Quantamental Investment Group, told Seeking Alpha.
Vashi added: "Interestingly, the energy sector also took a sizeable hit today, and a lukewarm re-opening in China is probably the driver of this move. For investors looking to deploy capital right now, treasury bills are offering risk-free returns of ~4.7%."
As it stands, the S&P 500 has fallen more than 7% since the end of November. However, this would be far from the worst monthly performance of the year. The S&P 500 slumped more than 9% in September and posted larger-than-8% declines in both June and April.
Stocks have trended lower throughout December, as investors have worried about the Federal Reserve's hawkish projections and the threat that the central bank might be forced to continue to hike interest rate into the face of a slowing economy. This momentum has carried over into the final week of the year, which will likely continue to be marked by low volume and limited catalysts.
While stocks dropped, the action in the bond market was muted. The 10-year Treasury yield (US10Y) rose 3 basis points to 3.89%. The 2-year yield (US2Y) dipped about 1 basis point to 4.36%.
On the economic front, the market digested a new round of housing data. November pending home sales recorded another decline, falling 4% for the month. This steeper-than-expected slide followed a 4.6% drop in October.
In another economic release, State Street's investor confidence index dropped to 75.9 in December versus a reading of 90.3 in November.
Among active stocks, Tesla (TSLA) finally managed to finish higher despite the overall downward trend of the day. This broke a seven-session losing streak for Elon Musk's EV maker, which ticked off another 52-week low set early in the session. Cathie Wood was among the investors bargain-hunting in TSLA.