Stocks closed 2022 with more losses, giving the S&P 500 its worst year since 2008. The benchmark index fell 0.3% Friday, the last trading day of the year, leaving it down 19.4% for the year.
The technology-heavy Nasdaq and the Dow Jones industrial average also fell and ended the year in the red. The Fed’s battle against inflation will likely remain investors’ overarching concern in 2023, according to analysts. When Wall Street reopens after another long holiday weekend, investors will have several big updates on the employment market to digest in the first week of the new year.
The S&P 500’s suffered its largest calendar-year decline since a 38% drop in 2008. Closing at 3,839.50 on Friday, the S&P 500 is at the same level as March 2021.
The Nasdaq, meanwhile, dropped 33%, dropping it to the same level as July 2020.
The Dow, meanwhile, fell 9% in 2022
There was scant corporate or economic news for Wall Street to review on the last trading day of the year. Tesla rose 0.4%, as it continued to stabilize after steep losses earlier in the week. The electric vehicle maker is still on pace for a 65% loss this year.
Southwest Airlines rose 0.3% as its operations returned to relative normalcy following massive cancellations over the holiday period. The stock is still down 7.2% for the week.
Energy stocks held up better than the rest of the market as U.S. crude oil prices settled 2.4% higher.
Bond yields mostly rose. The yield on the 10-Year Treasury, which influences mortgage rates, rose to 3.88% from 3.82%.
Stocks struggled all year as inflation put increasing pressure on consumers and raised concerns about economies slipping into recession. Central banks raised interest rates to fight high prices. The Federal Reserve’s aggressive rate hikes remain a major focus for investors as the central bank walks a thin line between raising rates enough to cool inflation, but not so much that they stall the U.S. economy into a recession.
The Fed’s key lending rate stood at a range of 0% to 0.25% at the beginning of 2022 and will close the year at a range of 4.25% to 4.5% after seven increases. The U.S. central bank forecasts that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.
The S&P 500 fell 9.78 points, or 0.3%, to 3,839.50.
The Dow Jones Industrial Average fell 73.55 points, or 0.2%, to 33,147.25.
The Nasdaq fell 11.61 points, or 0.1%, to 10,466.48.
The Russell 2000 index of smaller companies fell 5 points, or 0.3%, to 1,761.25.
For the week:
The S&P 500 dropped 5.32 points, or 0.1%.
The Dow declined 56.68 points, or 0.2%.
The Nasdaq fell 31.38 points, or 0.3%.
The Russell 2000 rose 0.31 points, or less than 0.1%.
For the year:
The S&P 500 fell 926.68 points, or 19.4%.
The Dow dropped 3,191.05 points, or 8.8%.
The Nasdaq sank 5,178.49 points, or 33.1%.
The Russell 2000 lost 484.07 points, or 21.6%.