Stock Market Today: Stocks Struggle as Rally Loses Steam

Markets opened lower following three straight days of gains.

Today's focus was the latest update on weekly jobless claims, which showed the number of initial applicants for unemployment benefits fell to 184,000 last week. Not only was this well below the 227,000 recorded the week prior, but it was the lowest amount since September 1969, according to the Labor Department.

Investors also kept a cautious eye trained on omicron-related headlines.

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While several pharmaceutical firms this week – including Pfizer (PFE, +1.3%) and BioNTech (BNTX, -2.7%) – have said their vaccines help neutralize the newest COVID-19 strain, the U.K. on Wednesday imposed a mask mandate for certain indoor settings and a work-from-home order after data showed "rapid increases" in case counts, said British Prime Minister Boris Johnson.

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Tech stocks were the biggest losers today, with sharp losses for Tesla (TSLA, -6.1%) and Advanced Micro Devices (AMD, -4.9%) sending the Nasdaq Composite down 1.7% to 15,517.

The S&P 500 Index was also in the red at the close, off 0.7% to 4,667. The Dow Jones Industrial Average, meanwhile, spent most of the afternoon modestly higher on strength in Walgreens Boots Alliance (WBA, +1.4%), but succumbed to a marginal loss in the final minutes of trading, ending at 35,754.

Other news in the stock market today:

• The small-cap Russell 2000 slumped 2.3% to end at 2,220.
• U.S. crude oil futures ended their three-day win streak amid pessimism over re-emerging COVID travel curbs, dropping 2.0% to settle at $70.94 per barrel.
• Gold futures also declined, by 0.5% to $1,776.70 per ounce.
• Bitcoin retreated 6% to $47,685.18. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• CVS Health (CVS, +4.5%) jumped after delivering a multitude of good news at its investor-day event. The pharmaceutical chain expects to earn an adjusted $8.00 per share on $290.3 billion this year, higher than its previous guidance of $7.90 to $8.00 per share in adjusted profits and $286.5 billion to $290.3 billion in revenues. It also expects to grow adjusted earnings per share to between $8.10 to $8.30 per share in fiscal 2022, on sales of between $304 billion to $309 billion. CVS Health also announced a 10% hike in its quarterly dividend, to 55 cents per share from 50 cents previously, and said it would resume stock buybacks next year via a $10 billion share repurchase program.
• Warren Buffett holding RH (RH, +5.5%), which many know as Restoration Hardware, jumped Thursday on the back of a beat-and-raise quarterly report. Third-quarter revenues of $1.01 billion were up 19.7% year-over-year and beat expectations for $981.9 million, while adjusted earnings of $7.03 per share grew 13.4% and topped estimates for $6.61. "Notably, the company indicated that it had not seen a material slowdown in demand and deferred revenue, with customer deposits and other current liabilities sequentially increasing 6%, supporting that view," says Wedbush analyst Seth Basham, who reiterated his Outperform rating (equivalent of Buy) and upped his 12-month price target to $650 per share from $600. "Moreover, the fact that RH does not expect to fully unwind its backlog to normal levels in 2022 suggests the company expects continued strong (if not growing) demand."

Forecasts Call for a Fruitful 2022

Today's jobs data underscores a continuing theme of economic recovery, and consensus estimates are for the rebound to accelerate through 2022.

"A combination of record stimulus, a healthy consumer, an accommodative Federal Reserve (Fed), vaccinations and reopening of businesses all contributed to a big year in 2021," LPL Research says. "As the U.S. economy moves more to mid-cycle our 2022 forecast is for 4.0%-4.5% GDP growth in 2022."

While the firm admits this is a slowdown from 2021's 5.5% growth forecast, it's still a "very solid number."

Not surprisingly, many strategists making their top stock picks for 2022 are doing so with names from cyclical sectors like consumer discretionary and technology.

An accelerated economic recovery is certainly something we at Kiplinger kept in mind as we compiled our list of the best stocks for 2022. Several of these picks are set to outperform as the economy continues to rebound.

However, given how unpredictable the market is – as evidenced by the pandemic-related disruptions we've seen over the last two years – others are more defensive in nature, able to withstand volatility through stable long-term growth and attractive dividend yields.