A year that turns the stomach for the markets in 5 graphs



Wall Street is saying goodbye to (and letting go of) 2022. It’s been a year most investors would rather forget.

Russia’s invasion of Ukraine, tangled supply chains and another year of Covid turned markets upside down this year. Inflation spiked around the world and central banks raised rates at a record pace to prevent price rises from spiraling out of control. China, the world’s second-largest economy, regularly locks down entire cities to contain the pandemic. Power supplies have been cut off, but recession fears mean demand falls in the second half of the year anyway. Intense storms and climate change also disrupted the markets.

That left few safe places for investors to park their money this year.

The Dow fell 200 points, or 0.6% on Friday, the last trading day of the year. Over the course of the year, the Dow Jones has fallen more than 9%, its worst year since 2008.

The S&P 500 was down 0.7% on Friday, leaving it down 19.9% ​​for the year.

The Nasdaq Composite Index was down nearly 1% on Friday, near its lowest level since July 2020. The tech-heavy index has taken a beating this year, falling 34%.

European shares closed the year down 11.8%, securing their worst annual performance since 2018.

And while the actions had a miserable year, bonds fared even worse. Inflation, massive rate hikes and a super-strong dollar made bonds unattractive to investors.

The S&P US Treasury Index yield was -10.7% in 2022. The 30-year US Treasury note, at its lowest point, fell to its worst yield, -35%, in a century. Corporate bonds also had a miserable 2022: The yield on bonds issued by S&P 500 companies was -14.2% this year. The Bloomberg Aggregate US Bond Index had its worst year since the index’s inception in 1977, according to FactSet.

Inflation, which briefly rose above 9% in the United States, a 40-year high, hurt economic growth, even as consumers continued to spend. But mostly it hurt corporate profits.

Earnings for S&P 500 companies are expected to have grown just 5.1% this year, well below the 8.5% average annual increase Wall Street has posted over the past 10 years, according to John Butters, a senior analyst. of FactSet earnings.

Energy, which grew when oil and gas prices rose earlier this year, accounted for all of Wall Street’s gains. Excluding energy, earnings for the S&P 500 would have fallen 1.8% this year, Butters forecast.

Medium to paltry gains sent the stock falling sharply throughout the year. Global stock markets have lost $33 trillion in value since their highs.

Generac Holdings, an energy technology solutions company, is the worst-performing stock in the S&P 500 this year, down about 74%. In second place is the dating app company Match Group, with 70% less.

Growth stocks, or shares of companies that are expanding their business rapidly, were hit particularly hard. Investors value these companies based on expectations of future earnings. Those look less attractive in a world where interest rates are rising.

Elon Musk’s Tesla is down about 70%, making the auto-tech company the third-worst performer this year. Meta, Facebook’s parent company, also appears in the bottom 10 stocks, down 65%.

That’s quite a shakeup: Earlier this year, Tesla was the fifth most valuable company in the S&P 500 and Meta was sixth. Tesla is now the 11th most valuable company in the index and Meta is 19th.

Even Amazon, Apple and Microsoft, tech names that have become investor staples, took big hits as investors adjusted to an environment where rates were rising.

There were some winners. The energy sector has returned more than 60% this year, significantly outperforming all other sectors in the S&P 500. No other sector has gained even 5% year to date.

Occidental Petroleum has been the biggest gainer in the S&P 500, up 122% year to date. Constellation Energy is in second place with a 109% gain, and Hess is in third place with a 94% gain.

As the shine has faded from the markets, one of the biggest stories has been the disastrous cryptocurrency crisis. After a dramatic 2021 rally to all-time highs (remember the dogecoin rally?), investors were faced with an epic meltdown. The implosion of parts of the industry once considered relatively stable, such as Sam Bankman-Fried’s FTX exchange, sent traders running for cover.

Crypto insiders acknowledge that it will likely take years to rebuild trust. As regulators circle, the exciting days of profiting from memes feel like a distant memory.


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