Stock futures dipped Friday morning as traders get set to close out a stellar 2021.
Futures tied to the Dow Jones Industrial Average dipped about 50 points, or 0.1%. S&P 500 and Nasdaq 100 futures also both edged 0.1% lower.
Friday’s moves came as traders continued to weigh the threat of the omicron Covid-19 variant. On Thursday, the Centers for Disease Control and Prevention said “avoid cruise travel, regardless of vaccination status.” However, White House medical advisor Dr. Anthony Fauci predicted earlier in the week that the omicron wave could peak by the end of January.
The action also came amid reduced trading volumes due to the holiday season.
“We’re at the end of the year, it’s a holiday – liquidity wanes a little bit, but we have a strong economy … there are a lot of positive sides to the market next year,” Sylvia Jablonski, chief investment officer at Defiance ETFs, told CNBC’s “Closing Bell” Thursday.
The major averages faded into the close Thursday to end the day lower. The Dow snapped a six-day winning streak, while the S&P 500 closed less than 1% below its record.
Big year for stocks
Stocks have been on fire in 2021.
Entering Friday’s session, the S&P 500 was up 27.2% year to date. That puts the market benchmark on track for its third straight annual gain. Energy and real estate have been the best-performing sectors in the S&P 500 this year, surging more than 40% each. Tech and financials are also up more than 30%.
The 30-stock Dow was up 18.9% through Thursday’s close, also putting it on pace for its third consecutive yearly gain. Home Depot and Microsoft have led the Dow gains, rising more than 50% each.
The tech-focused Nasdaq has risen 22.1% this year, putting the composite on track for its ninth annual gain in 10 years. Names like Alphabet, Apple, Meta Platforms and Tesla have led Nasdaq’s gains this year.
This year’s strong gains came as the global economy began its recovery from the 2020 Covid lockdowns, while the Federal Reserve maintained supportive measures first implemented at the onset of the pandemic.
However, market bull Chris Harvey, Wells Fargo Securities’ head of equity strategy, said he’s turning cautious looking to 2022.
“We’ve been bull at year-end, we thought there’d be a melt-up, but now it’s time as we look at the landscape for more sobering thoughts,” he told CNBC’s “Fast Money.” “There’s this pervasive mentality that the market can bend, but can’t break. We do expect a 10% pullback next year either in 2Q or in the beginning of the summertime.”
He added, “We’re late in the cycle … we expect to see multiple compression, whether it’s due to deceleration of growth, the Fed getting more aggressive – or maybe what we’re going to see is a peaking of pricing. That can lead to a peaking multiples, and of course, a peaking of margins. So we’re a lot more conservative this year. We want people to think about the risk side of the equation first and then the return side.”
–CNBC’s Fred Imbert contributed to this report.