January 29, 2023

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Stocks Drop to End Wall Street’s Worst Year Since 2008 S&P 500 Ends 2022 Down Nearly 20%

Stocks fell on Friday to end a brutal 2022 with a whimper, as Wall Street ended its worst year since 2008 on a sour note.

The Dow Jones Industrial Average fell 73.55 points, or 0.22%, to close at 33,147.25. The S&P 500 fell 0.25%, closing at 3,839.50. The Nasdaq Composite fell 0.11%, to 10,466.88.

Friday was the last day of trading in what has been a traumatic year for stocks. All three averages suffered their worst year since 2008 and snapped a three-year winning streak. The Dow Jones had the best performance among the indices in 2022, down about 8.8%. The S&P 500 fell 19.4%, 20% off its record high, while the tech-heavy Nasdaq fell 33.1%.

Steady inflation and aggressive rate hikes by the Federal Reserve dampened growth and technology stocks and weighed on investor sentiment throughout the year. Geopolitical concerns and volatile economic data also kept the markets on edge.

“We’ve had everything from Covid issues in China to the invasion of Ukraine. They’ve all been very dangerous. But for investors, that’s what the Fed does,” said Art Kashin, director of floor operations at UBS. CNBC’s “The Exchange.”

As the calendar turns into a new year, some investors think the pain is far from over. They expect the bear market to continue until a recession hits or the Fed pivots. Some project stocks will also hit new lows before rebounding in the second half of 2023.

“I would tell you it’s going to be like ‘The Wizard of Oz’ and everything will be in glorious color in a minute or two. I think we may have a bumpy first quarter, and depending on the Fed it may last a little bit longer than that,” Cashin said.

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Despite the annual losses, the Dow and S&P 500 broke three-quarter loss streaks in the last three months of the year. But the Nasdaq, which is dominated by companies like Apple, Tesla and Microsoft, has stumbled through its fourth straight negative quarter for the first time since 2001. All three averages are negative for December.

The communications services sector has been the worst performer in the S&P 500 this year, down more than 40%, followed by consumer discretionary goods. The energy sector was the only sector to gain 59%.

Gabriel Curtis contributed reporting

Correction: The chart in this story has been updated to reflect the correct year-to-date decline in the Dow Jones Industrial Average.