Futures for the S&P 500 gained 0.4% Monday. The index ended 2021 up 27%, notching 70 record highs along the way. Contracts for the tech-focused Nasdaq-100 added 0.5% on Monday and futures for the Dow Jones Industrial Average rose 0.4%.
Investors see a rockier path ahead for stocks this year. The initial rollout of Covid-19 vaccines and the easing of restrictions to contain the spread of the coronavirus, along with easy-money policies from central banks, helped support markets last year.
The unwind of the Federal Reserve’s bond-buying program and likely interest-rate increases could weigh on markets in 2022. Stocks have benefited from low rates, which have fueled riskier investments.
While some investors expect that inflation, which reached a 39-year high in November, has peaked, others are worried that Omicron could prolong supply-chain disruptions, adding further pressure to prices.
"It’s going to be a little bit bumpier than 2021. The three big questions that we ended the year with are still here: Omicron, inflation and supply chains, and the Fed," said Esty Dwek, chief investment officer at FlowBank. "There’s definitely potential for outperformance for equity markets. I don’t think we’ll see 20% plus but we could see double-digits."
The Turkish lira declined 1.5% against the dollar after official data showed that inflation jumped to 36.1% annually in December. The lira’s dollar value has deteriorated in recent months following a series of central bank interest-rate cuts and other government economic policies that have caused prices to rise.
Overseas, the Stoxx Europe 600 gained 0.7%. Markets in China, Japan, and Australia were closed for a holiday. South Korea’s Kospi closed up 0.4%, and Hong Kong’s Hang Seng fell 0.5%.