Stocks end 2022 with a thud; Treasury yields, oil prices rise
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Released December 30, 2022 • 3 minutes read
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NEW YORK – Wall Street stock indices closed lower on Friday, the last trading day of 2022, while Treasury yields rose along with oil futures as investors grappled with worries about a possible recession and the U.S. central bank prepared for the new year.
In currencies, the dollar, which benefited from rising US interest rates, fell on the day but was on track to gain about 8% through 2022, its biggest annual gain since 2015.
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The US 10-year Treasury yield rose on Friday, ending the trading year with the largest annual rise in decades, buoyed by aggressive Fed rate hikes.
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The Fed and central banks around the world have hiked interest rates to combat rising inflation fueled by supply chain issues related to the COVID-19 pandemic and an energy crisis linked to oil-producer Russia’s invasion of Ukraine.
As a result, all three major averages posted their largest one-year percentage declines since the 2008 financial crisis, with the S&P 500 posting a 19.4% decline for 2022, the Nasdaq closing 33% down, and the Dow down 8.7% for the year.
“There is uncertainty about fundamentals, what the economy is going to do, what the Fed is going to do, what earnings are going to do. But will the market also start with a January sell-off?” said James Ragan, director of Wealth Management Research DA Davidson in Seattle.
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“There’s this fear out there, so portfolio managers and traders just don’t want to be in a real risk position going into the new year. That happened today and all week.”
On Friday, the Dow Jones Industrial Average fell 73.55 points, or 0.22%, to 33,147.25, the S&P 500 lost 9.78 points, or 0.25%, to 3,839.5 and the Nasdaq Composite fell 11.61 points or 0.11% to 10,466.48.
MSCI’s world stock index fell 0.24% on the day, posting about a 20% annual decline, the largest since 2008, when it fell more than 43%.
Aside from domestic worries, investors around the world are also watching China, the world’s second largest economy, for signs of weakness.
China’s healthcare system has been strained by rising COVID cases since it began easing tough restrictions this month. Spain and Malaysia on Friday joined countries imposing or considering restrictions on travelers from China.
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Among currencies, the dollar is up 7.8% for the year, but it was on track for a 7.7% loss this quarter, its biggest drop since the third quarter of 2010.
The dollar index fell 0.462% while the euro rose 0.39% to $1.0703 on Friday.
The Japanese yen rose 1.36% against the greenback to 131.21 per dollar, while sterling was last traded at $1.2082, up 0.25% on the day.
In fixed income, the benchmark 10-year bond rose 4.4 basis points to 3.879% from 3.835% late Thursday.
US crude oil futures posted a second straight annual gain after a highly volatile year marked by tight supplies due to the Ukraine war and subsequent falling demand from China, the world’s largest crude oil importer.
For the day, US crude was up 2.4%, or $1.86, to $80.26 a barrel and Brent closed at $85.91, up $2.45, or 2.94% on the day.
Gold posted its biggest quarterly gain since June 2020, while the Fed’s rapid tightening cycle had dampened bullion performance for the full year.
Spot gold rose 0.4% to $1,822.66 an ounce. US gold futures rose 0.15% to $1,819.70 an ounce.
(Reporting by Sinéad Carew, Chuck Mikolajczak, Carolyn Cohn, Ankur Banerjee; Editing by Simon Cameron-Moore, Sam Holmes, Philippa Fletcher, Chizu Nomiyama, Josie Kao, and Diane Craft)
