Stocks fell on Friday as investors made their final trades in the worst year for the market since 2008.
The Dow Jones Industrial Average slipped 308 points, or 0.9%. The S&P 500 shed 1%, while the Nasdaq Composite dropped 1.1%.
Friday marks the final day of trading of what has been a painful year for stocks. A volatile bear market, sticky inflation, and aggressive rate hikes from the Federal Reserve battered growth and technology stocks. These factors also weighed on investor sentiment.
All three of the major averages are marching towards their worst year since 2008, slated to snap a three-year winning streak. The Dow fared the best of the indexes in 2022, down 9.4%, while the S&P and tech-heavy Nasdaq tumbled 20% and nearly 34%, respectively.
“We’ve had everything from Covid problems in China to the invasion of Ukraine. They’ve all been very serious. But for investors, it is what the Fed is doing,” said Art Cashin, director of floor operations for UBS, on “The Exchange.”
As the calendar year turns the corner, some investors think the pain is far from over, and expect the bear market to persist until a recession hits or the Fed pivots. Some also project stocks will hit new lows before rebounding in the second half of 2023.
“I would love to tell you that it is going to be like the ‘Wizard of Oz’ and everything is going to be in glorious color 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 the annual losses, the Dow and S&P 500 are on pace to snap three-quarter losing streaks. The tech-heavy Nasdaq, however, is on track for its fourth consecutive negative quarter for the first time since 2001.
Communication services stocks in the S&P 500 are down more than 40% on the year and consumer discretionary has fallen 37.4%, while energy, the large-cap index’s only positive sector, has soared nearly 58%.
Next week will see a slightly more active slate for economic data, highlighted by the nonfarm payrolls report set for Jan. 6. Financial markets are closed Monday in observance of the New Year’s Day holiday.
— Gabriel Cortes contributed reporting
Correction: A chart in this story has been updated to reflect the correct year-to-date decline for the Dow Jones Industrial Average.