Futures ticked up modestly on Thursday ahead of Wall Street’s last trading day of 2021.
U.S. equity markets will be open on New Year’s Eve for the first time in a decade thanks to NYSE Rule 7.2, which states trading is closed either Friday or Monday if a holiday falls on a weekend, with the exception of “unusual business conditions, such as the end of a monthly or yearly accounting period.” Bond traders will get to call it a day at 2:00 p.m. ET.
Markets mostly charged higher this week in a typically-bullish year-end run, even as reports of rising COVID-19 cases pour in across the globe. Swings were exaggerated by low trading volumes, with many on Wall Street on vacation.
The S&P 500 rallied to an intraday high on Thursday but receded late in the trading session to end lower after hitting its 70th record close of the year Wednesday. The index recorded a new all-time high every month this year, making 2021 among its best years ever, according to data published by LPL Research. The only other year it did so was in 2014.
“Although many were caught flat-footed by the strong equity returns this year, there were numerous clues,” said Ryan Detrick, LPL Financial chief market strategist, in a note.
“The huge end of year rally in 2020 was the first clue,” Detrick said. “Add in a strong first five days, a strong first quarter, the S&P 500 holding above the December lows in the first quarter, and right there you had several signals early in the year that strong returns were quite possible in 2021.”
Insigneo Financial Group CIO Ahmed Riesgo told Yahoo Finance Live that it was actually strong returns by only some companies that contributed to the index’s gains.
“Did the market have a great year in 2021? Most people would say absolutely,” he asserted, though adding it is more accurate to say that a few stocks have done “phenomenally” well, while the vast majority have been in the red.
“I think what you’re going to get next year is that internal rotation where these few stocks that performed very well in 2021 are going to under perform, perhaps drag the market down a bit, while the vast majority of stocks will shoot up,” Riesgo said. “All in all, taken together, this points to around mid- to single-digit returns for the [S&P 500] next year.”
Inflation is expected to be a focal point among investors in the new year. Rising prices have cornered the Federal Reserve into a hawkish pivot from its earlier forecasts to anticipate a quicker walk back of its pandemic-era monetary policies and boost its forecasts for the pace of potential rate hikes.
“We need to get through the peak of some of this inflation data that we’re reading,” Chris Pollard, head of market strategy at Cowen Research, told Yahoo Finance Live. “The first two months of this year are going to see some pretty elevated core PCE numbers which are what the Fed focuses policy on.”
6:00 p.m. ET: Futures inch higher after markets close in the red
Here’s how contracts on the major indexes fared ahead of 2021’s final trading day:
S&P 500 futures (ES=F): 2.50 points (0.05%), to 4,774.75
Dow futures (YM=F): 14.00 points (0.04%), to 36,305
Nasdaq futures (NQ=F): 10.50 points (0.06%) to 16,440.75
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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