U.S. equities continued to slide toward the end of the year, and it appears increasingly unlikely that the stock market would be able to mount a successful rally to build momentum into 2023. The NASDAQ 100 index lead the market downfall during the holiday-shortened trading week and is on pace for its worst decline for the year since the Global Financial Crisis, amid growing concern about a recession in 2023 and surging COVID-19 cases in China.

With light news flows this week, financial markets were choppy and traded on low volumes as return from the Christmas break was muted with investors extending celebrations into the new year. Traders are wary about a possible end-of-year recovery and look to farewell a dismal year for the stock market and prepare for more volatility in 2023.

Economic data this week showed that house prices aren’t falling further, which has the potential to give the Fed additional ammunition in its campaign of monetary policy tightening and could in turn serve to limit upside potential for stocks in the coming months.

Wall Street’s main indexes rebounded strongly on Thursday, however the NASDAQ 100 index is still trading near its 2022 low, as investors grappled with mixed economic data, surging COVID-19 cases in China, and geopolitical tensions heading into 2023.

The tech index was supported by a fall in Treasury yields and economic data showing the labour market is slowing, although it is possible that after heavy tax-loss selling last week, investors were looking for bargains. Continuing jobless claims came slightly ahead of economist’s expectations; however, the labor market remains very tight as unemployment claims are rising from historically low levels and it is likely to take a bit of time before we see deterioration.