Stocks fell on Friday as investors made their final trades in the worst year for the market since 2008.
The Dow Jones Industrial Average fell 220 points, or 0.7%. The S&P 500 fell 0.8%, while the Nasdaq Composite also fell 0.8%.
Friday marks the last day of trading in what has been a painful year for stocks. The three major averages are headed for their worst year since 2008, set to snap a three-year winning streak. The Dow was the best of the indexes in 2022, up 9.4%. The S&P 500 and the tech Nasdaq fell 20% and nearly 34%, respectively.
Persistent inflation and aggressive rate hikes by the Federal Reserve weighed on growth and tech stocks and weighed on investor sentiment throughout the year. Geopolitical concerns and volatile economic data also kept markets on edge.
“We’ve had everything from Covid problems in China to the invasion of Ukraine. They’ve all been very serious. But for investors, it’s what the Fed is doing,” said Art Cashin, director of UBS floor operations, in “The Exchange”.
As the calendar turns to a new year, some investors think the pain is far from over. They expect the bear market to persist until a recession hits or the Fed pivots. Some also predict that stocks will hit new lows before recovering in the second half of 2023.
“I’d love to tell you it’s going to be like the ‘Wizard of Oz’ and everything will be gloriously colorful in a moment or two. I think we may have a bumpy first quarter, and depending on the Fed it may last a little longer than that,” Cashin said.
Despite annual losses, the Dow and S&P 500 are on pace for a three-quarter losing streak. However, the tech-heavy Nasdaq is headed for its fourth straight negative quarter for the first time since 2001. All three averages are negative for December, though.
Communications services was the worst-performing sector in the S&P 500 this year, down more than 40%, followed by consumer discretionary. Energy was the only sector that rose, by almost 60%.
— Gabriel Cortés contributed to this report
Correction: A chart in this story has been updated to reflect the correct year-to-date decline for the Dow Jones Industrial Average.