December 29, 2022, marked the last trading day of the year on global stock exchanges – and it was one of the roughest days for the world’s financial sector as it marked its worst year since 2008.
All three of Wall Street’s major exchanges ended 2022 in a dismal fashion. The Dow, which had already fallen by 9% throughout the year, dropped by an additional 73 points to close at 0.2%.
The S&P 500, on the other hand, fell by 0.3% on the 29th, ending the year down by 20%.
But the Nasdaq is seen as one of the biggest casualties of 2022, given the way a number of tech stocks tumbled throughout the year and the numerous issues hitting the tech industry in general. On the last day of trading, the Nasdaq Composite fell by 0.1%, almost at its lowest since July 2020. The index also fell by around 33% towards the year’s end.
But US stock indices weren’t the only ones feeling the pinch. European stocks also fell by 11.8% on the final trading day of 2022, marking their worst run in more than a decade.
A Difficult Year for Growth
Inflation is another factor that hampered growth for much of 2022. In the United States, inflation went over 9%, the highest it has been in four decades, despite healthier consumer spending. Despite the Fed’s aggressive imposition of interest rate hikes, corporate profits bore the brunt of inflation’s worst effects.
According to FactSet senior earnings analyst John Butters, earnings for a number of companies listed in the S&P 500 grew by just 5.1% at the end of 2022, a great deal lower than the average annual increase of 8.5% previously observed by Wall Street.
But one field that managed to grow throughout the year is the energy sector, mostly because of the way oil and gas costs surged early in 2022. Indeed, if the energy sector had not forged ahead, the S&P 500’s earnings would have fallen by an additional 1.8%.
Numerous socio-political factors, as well as the ongoing pandemic, were blamed for the less than ideal performance of global markets throughout 2022.
The economic impact of the Russian invasion of Ukraine is still felt throughout the globe, along with unresolved issues regarding supply chains affecting the international manufacturing and distribution industries, the present energy crisis, as well as the failure of China’s excessively stringent anti-Covid policies which have cut into the productivity of its manufacturing sector.
The effects of climate change, seen in the form of more intense storms or severe droughts, also affected agriculture throughout the world, causing further economic distress, especially in developing economies.
As a result, investors remain unsure as to where to put their money in the new year.