Tesla and Moderna Stock Started 2022 Very Differently. What History Says Happens Next.
After a blockbuster 2021 for stocks, most strategists see 2022 as being more muted for equities.
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The first trading day of 2022 saw both the Dow Jones Industrial Average and S&P 500 finish at record highs for only the sixth time in history and the second time in 30 years.
The stock market action on Monday also saw the usual divergence of winners and losers: Tesla (ticker: TSLA) was the biggest riser among S&P 500 constituents, climbing 13.5%, while Moderna (MRNA) was the biggest loser, posting a 7.5% drop.
What does history say happens next? For the stock market as a whole: not a lot. The first day of the year doesn’t count for much in the grand scheme of things when it comes to indexes like the Dow or S&P 500.
But for individual stocks, the first trading day of the year could portend a lot more. The five biggest winners and losers in the S&P 500 as 2021 got underway in large part ended the year on the same foot they started on—for better or worse.
On Jan. 4, 2021, Moderna was the biggest gainer with a jump of 7%, followed by Bath & Body Works (BBWI) with a 6.5% gain, Newmont (NEM) with 5.4%, Tapestry (TPR) with 5.2%, and Freeport-McMoRan (FCX) with 4.3%.
As for the decliner, Teledyne Technologies (TDY) had the dubious honor of starting 2021 with the worst performance, notching a 7.6% decline. It was followed by Norwegian Cruise Line Holdings (NCLH), which lost 6.7%, Penn National Gaming (PENN) with a 6.3% dip, Carnival
(CCL), which fell 5.9%, and a similar 5.9% fall for Howmet Aerospace (HWM).
On average, 2021’s top-five gainers on the first trading day of the year climbed a whopping 74% across the next 12 months—far outpacing the wider S&P 500, which rose 27% last year. Gold miner Newmont was the only stock to underperform the index, increasing just 3.5% across 2021. Moderna, which was Jan. 4’s golden child, soared 143% across the same period.
It was a gloomier picture for the stocks that started 2021 deep in the red. On average, these five stocks fell 8.5%—with Penn National Gaming collapsing 40%—and only two eking out 2021 with any gains. Shares in all five companies underperformed the S&P 500.
That puts Monday, and 2022, into more perspective.
After Tesla, the biggest riser in the S&P 500 on Monday was Discovery (DISCA), with a 7.6% gain, and then Occidental Petroleum (OXY) with a 7.1% jump. Norwegian Cruise Line Holdings started 2022 on the winners list, as opposed to 2021, rising 6.9%, and the top five was rounded out by ViacomCBS (VIAC), which increased 6.8%.
As for the less fortunate, following Moderna’s fall from grace—from pole position in 2021 to Monday’s largest decliner—was Fortinet (FTNT), falling 7.3%. Bio-Techne (TECH) came next, declining 5.7%, then LabCorp (LH) with a 5.1% drop, and then Quest Diagnostics (DGX) completed the list of losers, slipping 5%.
But the extent to which these one-day performances match analysts’ outlooks for the stocks is decidedly one-sided toward the bulls.
As a group, Monday’s biggest risers—excluding Tesla, which attracts wildly divergent valuations—could see returns of 42% from their close on 2022’s trading debut, based on the combined average of analyst price targets collected by FactSet. That breaks down to implied returns of 54% for Discovery, 31% for Occidental Petroleum, 39% for Norwegian Cruise Line Holdings, and 44% for ViacomCBS.
As for the losers’ list, investors may have less to fear than 2021’s history lesson suggests. The basket of Monday’s biggest fallers could still see gains of 14% in 2022, based on analysts’ combined average price targets, including 26% for Moderna, 12% for Fortinet, 14% for Bio-Techne, and 17% for LabCorp. Quest Diagnostics average price target implied a negative 0.2% return across this year.
As for the stock market at large, the first trading day of the year doesn’t typically foretell the future. After all, the S&P 500 declined 1.5% on Jan. 4, 2021—the seventh biggest day-one drop on record, with only three years meaningfully worse—before returning a blockbuster 27%. That put it in the top fifth of years dating back to 1927. The Dow dipped 1.3% in its 2021 debut and rose 19% across the next 12 months.
While the Dow and S&P 500 beginning 2022 by notching new records is, surely, a sign of optimism in markets, investors shouldn’t hold out hope for outsized returns.
As a recent cover story in Barron’s outlined, financial strategists predict more-muted gains for 2022. Year-end targets for the S&P 500 range from the mid-4,000s in terms of points to the low-5,000s; the index ended Monday at 4,796. Even a bullish target of 5,100 points implies a 2022 return of 7%.
But for some, like researchers at Fundstrat Global Advisors, even the S&P 500 at 5,100 is a conservative outlook—and the strong start to 2022 is a good sign.
Since 1938, the stock market has returned an average 12% and median 16% in years following a yearly performance of 27% or better, the team at Fundstrat said, citing historical data, with the only bad post-1938 year being 1946.
As J.P. Morgan strategists wrote in a report Tuesday, positive catalysts for the stock market have yet to be exhausted, with a further upside for equities ahead even after such a strong run.
The investment bank’s team believes that there’s little reason to start being bearish—even as they rate U.S. equities at Neutral, cautioning that momentum could stall if the outperformance of tech begins to wane. The growth backdrop is likely to stay supportive this year, the strategists said.
Write to Jack Denton at [email protected]
