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Monday, January 30, 2023

Wall Street Wraps up Worst Year Since 2008 Financial Crisis

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US stocks dropped on Friday as investors made their final trades in what was the worst year for the market since the financial crisis of 2008 amid growing recession fears.

The Dow Jones Industrial Average slid 280 points, or 0.8%, on the last trading day of 2022, and finished down over 9% for the year.

The S&P 500 shed 1.1% on Friday, and lost almost 20% for the year, while the Nasdaq Composite dropped 1.4% on Friday. The tech-heavy index nosedived by over 30% for the year.

The three major indices finished what has been their worst year since 2008, as soaring inflation and aggressive rate hikes from the US Federal Reserve battered growth and weighed on investor sentiment.

Inflation in the US hit a four-decade high this year, with consumer prices soaring by over 9% in the summer in annual terms.

The inflation rate slowed towards the end of the year. However, experts expect it to remain above the pre-pandemic levels and believe that it will take a few years for price growth to return to 2019 levels.

Meanwhile, although some investors expect next year to herald a market recovery, many others warn that stocks could hit new lows in 2023.

“We’re sort of stuck in neutral right now, because there are more unanswered questions than there are known entities,” a senior market strategist at Riverfront Investment Group Rebecca Felton told CNBC.

“We’ve got a lot riding on this coming earnings season, when we think about the pressures that are going to exist on margins,” she explained.

“There are a lot of questions as we head into the new year, but we certainly will be happy to see 2022 over,” Felton added.

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