New York CNN —
Wall Street is saying goodbye — and goodbye — to 2022. It was a year most investors would rather forget.
Russia’s invasion of Ukraine, disrupted supply chains and another year of Covid have turned markets upside down this year. Inflation rose around the world and central banks hiked interest rates at an historic pace to prevent inflation from spiraling out of control. China, the world’s second largest economy, has regularly shut down entire cities to contain the pandemic. Energy supplies have been disrupted, but fears of a recession are causing demand to fall in the second half of the year anyway. Heavy storms and climate change have also turned markets upside down.
This left investors with few safe places to park their money this year.
The Dow fell 200 points, or 0.6%, on Friday, the last trading day of the year. For the year, the Dow is down over 9%, its worst year since 2008.
The S&P 500 was down 0.7% on Friday, remaining down 19.9% for the year.
The Nasdaq Composite Index fell nearly 1% on Friday, near its lowest level since July 2020. The tech-heavy index has been battered this year, falling 34%.
European equities ended the year down 11.8%, posting their worst annual run since 2018.
And while stocks last had a miserable year, bonds fared even worse. Inflation, massive hikes in interest rates and a super-strong dollar made bonds unattractive for investors.
The S&P US Treasury Bond Index return was -10.7% in 2022. The 30-year US Treasury bond fell from its bottom to its worst return of -35% in a century. Corporate bonds also had a miserable 2022, with bonds issued by S&P 500 companies returning -14.2% that year. According to FactSet, the Bloomberg Aggregate US Bond Index had its worst year since its inception in 1977.
Inflation, which briefly soared above 9% in the United States – a 40-year high – hurt economic growth, even as consumers continued to spend. But it has mostly hurt corporate profits.
According to John Butters, senior earnings analyst at FactSet, earnings for S&P 500 companies are likely to have risen just 5.1% this year, well below the 8.5% compound annual increase Wall Street has seen over the past 10 years years recorded.
Energy, which was booming earlier this year as oil and gas prices soared, accounted for all of Wall Street’s earnings gains. Excluding energy, S&P 500 earnings would have fallen 1.8% this year, Butters predicted.
Moderate to miserable earnings caused stocks to fall sharply throughout the year. Global equity markets have lost $33 trillion 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 dating app company Match Group, down 70%.
Growth stocks, or stocks of companies that are rapidly expanding their businesses, have been hit particularly hard. Investors rate these companies based on expectations for future earnings. These look less enticing 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 features in the bottom 10 stocks — down 65%.
That’s a huge shake: Earlier this year, Tesla was the fifth most valuable company on 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 — suffered major setbacks as investors adjusted to a rising-rate environment.
There were some winners. The energy sector has returned more than 60% this year, easily outperforming all other S&P 500 sectors. No other sector has gained even 5% year-to-date.
Occidental Petroleum was the biggest gainer in the S&P 500, up 122% year-to-date. Constellation Energy is in second place, up 109%, and Hess is third, up 94%.
When the shine came off the markets, one of the biggest stories was the catastrophic collapse of cryptocurrencies. After a dramatic surge in 2021 to record 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, caused traders to duck for cover.
Crypto insiders concede that it will likely take years to rebuild trust. As regulators circle, the heady days of coining profits from memes feel like a distant memory.