Stocks End Mixed, 3 More Trading Days Left In The Year  Image: Bigstock Stocks closed mixed yesterday with the Dow eking out a slight gain, while the S&P, Nasdaq, and small-cap Russell 2000 finished lower. On Monday, it was reported that holiday sales (November 1 thru December 24), were up 7.6% this year. That was a slower pace than last year's 8.5%. But another year of growth, especially when many were worried that we wouldn't see any, was a positive sign for the economy. Tuesday's Retail Inventories report rose by 0.1% m/m, up from last month's -0.4% pace. And Wholesale Inventories rose 1.0% m/m vs. last month's 0.5%, and views for 0.4%. The Case-Shiller Home Price Index slipped -0.5% m/m (adjusted), but came in better than expected vs. last month's -1.3%, and the consensus for -1.2%. Unadjusted, it was down -0.8% m/m vs. last month's -1.5%. On a y/y basis, it was up 8.6%, but under last month's pace of 10.4%. The International Trade in Goods report showed the trade deficit narrowing to -$83.3 billion vs. last months -$98.8B and views for -$97.0B. Imports were down -7.6%, while exports were down -3.1%. And the Dallas Fed Manufacturing Survey showed the General Activity Index came in at -18.8 vs. last month's print of -14.4 and estimates for -11.0. The Production Index came in at 9.7 vs. last month's 0.8. Today we'll get the Pending Homes Sales Index, the Richmond Fed Manufacturing Index, the Survey of Business Uncertainty, and the State Street Investor Confidence Index. With only 3 more trading days left in the week and the year, we're running out of time for the so-called Santa Claus rally to take place. And if stocks can't get their act together in time, the month of December, which is typically a strong one, will atypically end lower this year. Regardless, I know many are anxious to close the books on 2022, and start 2023 anew. The seasonals bode well for next year as the 4-year Presidential Cycle shows that year 3 (that's 2023), is the best year of all 4 years. In fact, since 1950, stocks have always gone up in the year after midterms, with an average 12-month forward return of 18.6%. But the driving forces next year will be the same ones as this year: inflation, interest rates, and the underlying economy. The difference, however, is that inflation was on the rise at the start of last year, while the Fed embarked on one of their fastest rate hikes in history. This time, we enter the new year with inflation on the decline. The pace of interest rates has slowed, with an end target in sight. And the economy (at the moment) appears resilient enough to avoid a recession next year. Things can change. But the way 2023 is set to begin is much different than the way 2022 began. And that's a positive. In the meantime, we still have 3 more days to make the best of 2022. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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