Stock Market Today: Stocks Stumble on Downbeat Data, Recession Fears

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Stocks kicked off the first trading day of the new year in much the same fashion as they closed out 2022 – with broad-based declines on comparatively light volume.

Some downbeat economic data and a gloomy outlook from the International Monetary Fund weighed on sentiment Tuesday, while steep selloffs in key names likewise did the equity markets no favors.

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It was a light day for economic news, but what the market did get, it sure didn't like. U.S. manufacturing activity continued to contract in December, with operating conditions deteriorating at the fastest pace since the height of the COVID-19 pandemic in May 2020, according to the S&P Global U.S. Manufacturing Purchasing Managers' Index.

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"The manufacturing sector posted a weak performance as 2022 was brought to a close, as output and new orders contracted at sharper rates," said Siân Jones, senior economist at S&P Global Market Intelligence. "Demand for goods dwindled as domestic orders and export sales dropped."

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In another blow to market participants' mood, the head of the International Monetary Fund warned that 2023 was ripe for widespread economic pain.

"We expect one-third of the world economy to be in recession," said Kristalina Georgieva, managing Director of the IMF, in an interview with CBS. "Why? Because the three big economies, U.S., E.U., China, are all slowing down simultaneously."

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At the single-stock level, Apple (AAPL, -3.7%) sold off sharply on continued worries about iPhone 14 shipments amid the COVID-19 outbreak sweeping across China. As the largest company by market capitalization, AAPL did damage to all three major indexes.

Meanwhile, shares in Tesla (TSLA, -12.2%) continued to plunge after the electric vehicle company delivered fewer cars during the final three months of 2022 than analysts had forecast. Worries about weakening demand for Tesla vehicles, particularly in China, have contributed to a long period of weakness in the stock.

At the closing bell, the blue-chip Dow Jones Industrial Average was down less than 0.1% at 33,136, while the broader S&P 500 fell 0.4% to finish at 3,824. The tech-heavy Nasdaq Composite declined 0.8% to end at 10,386.

Dividends and Defense for 2023

After the worst year for equities since 2008, plenty of investors are looking to play defense in 2023. Happily, there's no shortage of strategies to reduce volatility, collect regular income and zig when the broader market zags.

The best stocks for a bear market should serve investors well while markets remain in a funk, as should the best ETFs for a bear market. And don't forget that blue-chip dividend stocks – notably the best Dow dividend stocks – have a history of outperforming the broader market when times are tough.

As for the best dividend stocks you can count on, it's tough to beat the S&P 500 Dividend Aristocrats. Not only did these dividend-growth machines beat the broader market handily in 2022, but the magic of compounding ensures that even the Aristocrats with the paltriest of yields can generate gushers of income one day.

Be sure to check out the full list of the 65 best dividend stocks you can count on for 2023.

65 Best Dividend Stocks You Can Count On in 2023

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Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.

A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.

Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.

In his current role at Kiplinger, Dan writes about markets and macroeconomics.

Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.

Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.