Wall Street closes dismal year with worst loss since 2008
Wall Street stock indices ended lower on Friday on the last trading day of 2022, as Treasury bond yields rose along with oil futures as investors braced for the new year with concerns over a potential recession and the US Federal Reserve’s price hike.
In currency terms, the dollar, which has benefited from rising US interest rates, fell on the day but was on track for gains of about 8% in 2022, its biggest annual gain since 2015.
The 10-year US Treasury yield rose Friday, ending the trading year with its largest annual increase in decades, boosted further by aggressive rate hikes from the Fed.
The Fed and central banks around the world have raised interest rates to counter rising inflation due to supply chain issues related to the COVID-19 pandemic and an energy crisis linked to the Russian oil producer’s invasion of Ukraine .
As a result, the three major averages recorded their largest year-over-year percentage decline since the 2008 financial crisis, with the S&P 500 posting a 19.4% decline for 2022, the Nasdaq finishing 33% and the Dow Jones 8.7% lost for the year.
“There is uncertainty about the fundamentals, what the economy is going to do, what the Fed is going to do, what earnings are going to do. But also, will the market begin a sell-off in January? said James Ragan, director of Wealth Management Research DA Davidson in Seattle.
“There is fear, so portfolio managers and traders just don’t want to be in a position of real risk as the new year comes around. That’s what happened today and all week.
On Friday, the Dow Jones Industrial Average was down 73.55 points, or 0.22%, to 33,147.25, the S&P 500 was down 9.78 points, or 0.25%, to 3,839.5, and the Nasdaq Composite was down by 11.61 points, or 0.11%, to 10,466.48.
The MSCI global stock index fell 0.24% that day, posting an annual decline of about 20%, the biggest since 2008, when it fell more than 43%.
In addition to domestic concerns, investors around the world are also eyeing signs of weakness in China, the world’s second-largest economy.
China’s health care system has been strained by a huge number of COVID cases since it began lifting strict restrictions this month. Spain and Malaysia on Friday joined countries imposing or considering imposing restrictions on travelers from China.
In currency terms, the dollar gained 7.8% year-on-year but was on track to lose 7.7% this quarter, its biggest decline since the third quarter of 2010.
The dollar index fell 0.46%, while the euro rose 0.39% to $1.07 on Friday.
The Japanese yen rose 1.36% against the greenback to 131.21 per dollar, while the pound last traded at $1.20, up 0.25% on the day.
In fixed income, 10-year benchmark bonds rose 4.4 basis points to 3.87%, from 3.83% on Thursday evening.
US crude oil futures posted a second straight annual gain after an extremely volatile year marked by tight inventories due to the war in Ukraine and subsequently falling demand from China, the world’s largest importer of crude oil.
During the day, US crude was up 2.4% or $1.86 at $80.26 a barrel and Brent finished at $85.91, up $2.45 or 2.94% over the day.
Gold posted its biggest quarterly gain since June 2020 as the Fed’s rapid tightening cycle dampened bullion’s rally for the full year.
Spot gold added 0.4% to $1,822.66 an ounce. US gold futures gained 0.15% to $1,819.70 an ounce.
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