Author: CNBC News

Stock futures fell Monday evening as traders braced themselves for a flurry of economic data and the minutes from the latest Federal Reserve meeting this week to kick off the new year.

Futures tied to the Dow Jones Industrial Average fell 72 points, or 0.2%. S&P 500 futures shed 0.28% and Nasdaq 100 futures lost 0.44%.

All of the major averages closed 2022 with their worst losses since 2008, each snapping a three-year win streak. The Dow ended the year down about 8.8% at 33,147.25, and 10.3% off its 52-week high. The S&P 500 lost 19.4% for the year and now sits at 3,839.50, more than 20% below its record high. The tech-heavy Nasdaq tumbled 33.1% last year. It’s starting 2023 almost 34% from its record, at 10,466.88.

Inflation sparking “the worst defeat for both stocks and bonds in decades” was the biggest investor narrative for 2022, according to Greg Bassuk, CEO of AXS Investments. The new year kicks off with a cloud of worry that a “harder-than-desired landing” by the Fed and its inflation fighting moves could push the economy into a recession.

“2022 was characterized by an inflation-blindsiding market rout, in part because the year was kicked off with Wall Street and Main Street both anticipating a containment on rising prices and a Federal Reserve that would hold rates at lower levels,” he said. “But a fiercely opposite reality endured as inflation skyrocketed.”

“Moving into 2023, as prices remain materially elevated, investors would be prudent to consider inflation-sensitive assets, as well as cyclical and other stocks that tend to do well in rising price environments,” he added.

Investors are getting a bundle of data in the first trading week of the year and investors will be watching closely, looking for opportunities to adjust their portfolios to recover from the 2022 carnage. Wednesday is a big day with the Job Openings and Labor Turnover Survey, better known as JOLTS, due out in the morning and the minutes of the Fed’s latest policy meeting set to come out in the afternoon.

They’re also looking forward to Friday’s December jobs report, the final employment report the Fed will have to consider before its next meeting on Feb. 1. There are also several speeches by Fed presidents scheduled Thursday and Friday.

First up, however, are S&P Global manufacturing PMI and construction spending, due out at 9:45 a.m. and 10:00 a.m. ET on Tuesday.

Walgreens Boots Alliance and Constellation Brands will also report their quarterly financial results on Thursday, though it’s an otherwise quiet week for earnings reports.

Wickr Me, an Amazon-owned encrypted chat platform, stopped accepting new users after Dec. 31 and will shut down completely on Dec. 31 of this year, according to an announcement from the company.

The decision, first announced in November, follows several controversies surrounding the ultra-secure chat app, which allowed users to sign up without a phone number or other potentially identifying information, making it a favorite for security-minded groups including hackers, drug dealers and journalists.

In June, an NBC News investigation revealed that Wickr Me had become a go-to product for many people trading child sexual abuse material. The investigation identified 72 court cases from the past five years in which the defendant allegedly used Wickr (as it’s commonly known) to trade child sexual abuse material. Law enforcement officials and a representative for the National Center for Missing and Exploited Children told NBC News at the time that Wickr wasn’t doing enough to detect or report the trading of such material on its platform.

In a statement provided to NBC News in June, an Amazon Web Services spokesperson said: “Amazon is committed to preventing child sexual abuse material (CSAM) in every segment of our business, including Wickr, which maintains strict Terms of Use that clearly prohibit illegal activity. We act quickly on reports of illegal behavior, respond immediately to requests from law enforcement, and take the appropriate actions. Anyone found to be in violation of our terms is subject to account termination.”

“Wickr absolutely responds appropriately to, and cooperates with, law enforcement on these critical matters,” the spokesperson said.

In its statement in November, the company explained that it was shutting down Wickr Me to devote more resources and focus toward its business-to-business products, AWS Wickr and Wickr Enterprise. The post did not mention the business it has with government agencies, including the Department of Defense and the Department of Homeland Security.

When NBC News tried to create a new test account on the app on Jan. 1, it displayed a pop-up saying: “Wickr Me will not support new users starting 31-Dec-2022. Wickr Me will be unavailable after 31-Dec-2023.”

Wickr was founded in 2012, applying high-level encryption to a consumer-messaging product. By 2015, the company had raised $39 million in funding. That same year, numerous outlets reported that the Islamic State terrorist organization was using the app to recruit new members. In 2016, one of the first successful prosecutions against someone trading child pornography on the app was reported by the Deseret Morning News.

In June 2021, Wickr was acquired by Amazon Web Services. Since the acquisition, the company had faced questions about its government contracts with agencies like Customs and Border Protection, and attracted attention with its role in records-related scandals in which the app was used to automatically destroy government communications.

January is typically an overlooked month for retailers.

Shoppers make returns and exchanges. They come to stores with gift cards in hand. And they may spring for workout clothes or other items to follow through on New Year’s resolutions.

But this year, January carries higher stakes. The next few weeks, which close out many retailers’ fiscal year, could help determine whether the holiday quarter is a win or a bust. It’s an important time for helping stores clear out excess inventory, too. January could also set the tone for 2023 — when some economists and retail industry watchers anticipate the U.S. will tip into a recession.

So far, early holiday results have been better than some economists and retailers feared. Sales from Nov. 1 to Dec. 24 rose 7.6%, according to data from MasterCard SpendingPulse, which measures in-store and online retail sales across all forms of payment. The figure includes restaurants and is not adjusted for inflation, which rose 7.1% year over year in November.

Yet there are signs that shoppers may be running out of gas. Credit card balances have ticked up. Personal saving rates have fallen. And sales of big-ticket items like jewelry and electronics have weakened.

Plus, Americans’ spending spree during the earlier years of the pandemic, fueled by stimulus money, boredom and socked-away savings, have made for tough comparisons.

Retailers enter 2023 reckoning with the fact that store traffic already lagged during peak weeks of the holiday season.

Across six retailers — Walmart, Target, Best Buy, Nordstrom, Kohl’s and Macy’s — foot traffic dropped by an average of 3.22% year over year for the weeks from Black Friday through the week of Christmas, according to data from Placer.ai, an analytics firm that uses anonymized data from mobile devices to estimate overall visits to locations. It also declined by nearly 5% when compared to pre-pandemic patterns.

Now retailers are more on edge.

“It seems like a lot of the brands are anticipating a bigger thud in January,” said Stacey Widlitz, president of SW Retail Advisors, a consulting firm.

She has noticed more retailers are dangling gift cards to drum up sales. For instance, Urban Outfitters-owned retail chain Anthropologie on Friday offered $50 toward a future purchase for online shoppers who spend $200 or more. But that bonus cash must be used by Jan. 31, when the company’s quarter ends.

Widlitz said those offers are focused on nudging shoppers to make purchases during a time when there’s often a post-holiday lull. It is also retailers’ last chance to sell through excess inventory and start the new fiscal year in a cleaner position.

“It just looks like they’re trying to push people to get into stores after the new year,” she said.

But for some, a more budget-sensitive consumer could be an opportunity.

On an earnings call last month, Walmart CEO Doug McMillon said he anticipates a boost in sales as consumers feel stretched from holiday spending. Like many other retailers, Walmart’s holiday quarter includes January.

“Sometimes these quarters work out where the very end of December and January end up being stronger when people are particularly price sensitive,” he said. “So that’s kind of what I’m expecting.”

Already, the discounter has attracted wealthier shoppers with its lower-priced groceries and household staples. For the past two quarters, about 75% of its market share gains in food came from households that make more than $100,000 a year.

Yet like competitors Target and Costco, it has had a harder time selling discretionary merchandise that tends to drive higher profits than selling milk or paper towels.

On the positive side, said Michael Zdinak, an economist at S&P Global Market Intelligence, unemployment is low and the jobs market is still very tight. There are signs that inflation has cooled, with prices rising less than expected in November, the most recent month of available federal data.

On the other hand, he said food prices are still high, retail demand is weakening and savings aren’t looking as robust.

Personal saving rates have declined significantly. The percentage of disposable income that people save was 2.4% in November, according to the U.S. Bureau of Economic Analysis. That’s down from an average of 6.3% pre-pandemic, according to S&P Global Market Intelligence, which crunched the numbers from 1991 to 2019.

Zdinak said that low rate is unsustainable, especially as consumers have been spending money they put in their savings accounts during the earlier months and years of the pandemic.

Economists at the market data firm anticipate a recession to begin in the first quarter of 2023 and to last two quarters.

Zdinak said the downturn will be fueled by slashed orders and less manufacturing as many retailers clear through unwanted inventory after consumer preferences changed abruptly in 2022.

Then there are headwinds for consumers. Reality may soon hit families who have blown the budget on gifts or holiday travel, said Widlitz of SW Retail Advisors.

“Everyone gets through the holidays in denial and Feb. 1, when you get your [credit card] statement, or Jan. 15, whenever it comes, it’s like, ‘Oh!'” she said.

— Caitlyn Freda contributed to this report.

A lot has changed in technology since the dot-com boom and bust.

The internet went mobile. The data center went to the cloud. Cars are now driving themselves. Chatbots have gotten pretty smart.

But one thing has remained. When the economy turns, investors rush for the exits. Despite a furious rally on Thursday, the tech-laden Nasdaq finished in the red for a fourth straight quarter, marking the longest such streak since the dot-bomb period of 2000 to 2001. The only other negative four-quarter stretch in the Nasdaq’s five-decade history was in 1983-84, when the video game market crashed.

This year marks the first time the Nasdaq has ever fallen all four quarters. It dropped 9.1% in the first three months of the year, followed by a second-quarter plunge of 22% and a third-quarter decline of 4.1%. It fell 1% in the fourth quarter because of an 8.7% drop in December.

For the full year, the Nasdaq slid 33%, its steepest decline since 2008 and the third-worst year on record. The drop 14 years ago came during the financial meltdown caused by the housing crisis.

“It’s really hard to be positive on tech right now,” Gene Munster, managing partner of Loup Ventures, told CNBC’s Brian Sullivan on Wednesday. “You feel like you’re missing something. You feel like you’re not getting the joke.”

Other than 2008, the only other year worse for the Nasdaq was 2000, when the dot-com bubble burst and the index sank 39%. Early dreams of the internet taking over the world were vaporized. Pets.com, infamous for the sock puppet, went public in February of that year and shut down nine months later. EToys, which held its IPO in 1999 and saw its market cap grow to almost $8 billion, sank in 2000, losing almost all its value before going bankrupt early the next year. Delivery company Kozmo.com never got its IPO off the ground, filing in March 2000 and withdrawing its offering in August.

Amazon had its worst year ever in 2000, dropping 80%. Cisco fell 29% and then another 53% the next year. Microsoft plummeted by more than 60% and Apple by over 70%.

The parallels to today are quite stark.

In 2022, the company formerly known as Facebook lost roughly two-thirds of its value as investors balked at a future in the metaverse. Tesla fell by a similar amount, as the carmaker long valued like a tech company crashed into reality. Amazon dropped by half.

The IPO market this year was non-existent, but many of the companies that went public last year at astronomical valuations lost 80% or more of their value.

Perhaps the closest analogy to 2000 was the crypto market this year. Digital currencies Bitcoin and ether plunged by more than 60%. Over $2 trillion in value was wiped out as speculators fled crypto. Numerous companies went bankrupt, most notably crypto exchange FTX, which collapsed after reaching a $32 billion valuation earlier in the year. Founder Sam Bankman-Fried now faces criminal fraud charges.

The only major crypto company traded on the Nasdaq is Coinbase, which went public last year. In 2022, its shares fell 86%, eliminating more than $45 billion in market cap. In total, Nasdaq companies have shed close to $9 trillion in value this year, according to FactSet.

At its peak in 2000, Nasdaq companies were worth about $6.6 trillion in total, and proceeded to lose about $5 trillion of that by the time the market bottomed in October 2002.

Companies are downsizing and getting revalued after a decade of growth fueled by cheap money. With the Fed raising rates to try and get inflation under control, investors have stopped putting a premium on rapid unprofitable growth and started demanding cash generation.

“If you’re looking solely at future cash flows without profitability, those are the companies that did really well in 2020, and those are not as defensible today,” Shannon Saccocia, chief investment officer of SVB Private, told CNBC’s “Closing Bell: Overtime” on Tuesday. “The tech is dead narrative is probably in place for the next couple of quarters,” Saccocia said, adding that some parts of the sector “will have light at the end of this tunnel.”

The tunnel she’s describing is the continuing rate increases by the Fed, which may only end if the economy enters a recession. Either scenario is troubling for much of technology, which tends to thrive when the economy is in growth mode.

In mid-December, the Fed raised its benchmark interest rate to the highest in 15 years, lifting it to a target range of 4.25% to 4.5%. The rate was anchored near zero through the pandemic as well as in the years that followed the financial crisis.

Tech investor Chamath Palihapitiya told CNBC in late October that more than a decade of zero interest rates “perverted the market” and “allowed manias and asset bubbles to build in every single part of the economy.”

Palihapitiya took as much advantage as anyone of the cheap money available, pioneering investments in special purpose acquisition companies (SPACs), blank-check entities that hunt for companies to take public through a reverse merger.

With no yield available in fixed income and with tech attracting stratospheric valuations, SPACs took off, raising more than $160 billion on U.S. exchanges in 2021, nearly double the prior year, according to data from SPAC Research. That number sank to $13.4 billion this year. CNBC’s Post-SPAC index, comprised of the largest companies that have debuted via SPACs in the last two years, lost two-thirds of its value in 2022.

WATCH: The IPO market is as bad as it was in 2001

Anyone without health insurance has about two weeks left to get 2023 coverage through the public marketplace — and subsidies could make it affordable.

Open enrollment for the federal health care exchange runs through Jan. 15, with coverage taking effect Feb. 1. (If your state has its own exchange, the last day to enroll may be different.) After the sign-up window closes, you’d generally need to experience a qualifying life event — i.e., birth of a child or marriage — to be given a special enrollment period.

Most marketplace enrollees — 13 million of 14.5 million in 2022 — qualify for federal subsidies (technically tax credits) to help pay premiums. Four out of 5 customers will be able to find 2023 plans for $10 or less per month after accounting for those tax credits, according to the Centers for Medicare & Medicaid Services.

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Some people may also be eligible for help with cost sharing, such as deductibles and copays on certain plans, depending on their income.

For the most part, people who get insurance through the federal (or their state’s) exchange are self-employed or don’t have access to workplace insurance, or they don’t qualify for Medicare or Medicaid.

As of Dec. 15, nearly 11.5 million people had selected a plan through the marketplace, according to CMS.

The subsidies are still more generous than before the pandemic. Temporarily expanded subsidies that were put in place for 2021 and 2022 were extended through 2025 in the Inflation Reduction Act, which became law in August.

This means there is no income cap to qualify for subsidies, and the amount anyone pays for premiums is limited to 8.5% of their income as calculated by the exchange. Before the changes, the aid was generally only available to households with income from 100% to 400% of the federal poverty level.

The marketplace subsidies that you’re eligible for are based on factors that include income, age and the second-lowest-cost “silver” plan in your geographic area (which may or may not be the plan you enroll in).

For the income part of the determination, you’ll need to estimate it for 2023 during the sign-up process.