A sickening year for markets in 5 charts

New York
CNN
—

Wall Street bids farewell – and a good receipt – to 2022. It has been a year most investors would rather forget.

Russia’s invasion of Ukraine, snarled supply chains and another year of Covid turned the markets upside down this year. Inflation rose across the globe, and central banks raised interest rates at a historic pace to prevent price increases from spiraling out of control. China, the world’s second-largest economy, periodically shut down entire cities to contain the pandemic. The energy supply was cut, but fears of a recession lead to demand falling in the second half of the year anyway. Intense storms and climate change also gave the markets up.

That left few safe places for investors to park their money this year.

The Dow fell 200 points, or 0.6%, on Friday, the last trading day of the year. For the year, the Dow has fallen over 9%, its worst year since 2008.

The S&P 500 was 0.7% lower on Friday, bringing it down 19.9% ​​for the year.

The Nasdaq Composite Index fell nearly 1% on Friday, near its lowest level since July 2020. The tech-heavy index has struggled this year, falling 34%.

European shares ended the year down 11.8%, securing their worst annual run since 2018.

And while shares had a miserable year, bonds fared even worse. Inflation, massive interest rate hikes and a super strong dollar made bonds unattractive to investors.

The return on the S&P US Treasury Bond Index was -10.7% in 2022. The 30-year US Treasury bond, at its lowest, fell to its worst return, -35%, in a century. Corporate bonds also had a miserable 2022: The yield on bonds issued by S&P 500 companies was -14.2% this year. The Bloomberg Aggregate US Bond Index had its worst year since the index’s inception in 1977, according to FactSet.

Inflation, which briefly rose above 9% in the US – a 40-year high – hurt economic growth, even as consumers continued to spend. But it mostly hurt the company’s profits.

S&P 500 companies’ earnings are expected to have grown just 5.1% this year, well below the 8.5% average annual gain posted by Wall Street over the past 10 years, according to John Butters, senior earnings analyst at FactSet.

Energy, which boomed as oil and gas prices rose earlier this year, accounted for all of Wall Street’s gains. Excluding energy, S&P 500 earnings would have fallen 1.8% this year, Butters predicted.

Average to lousy profits sent the shares down sharply throughout the year. Global stock markets lost $33 trillion in value from their peaks.

Generac Holdings, an energy technology solutions company, is the worst-performing stock in the S&P 500 this year, down about 74%. In second place is dating app company Match Group, down 70%.

Growth stocks, or shares in companies that are expanding their business rapidly, were hammered particularly hard. Investors value these firms based on expectations of future profits. They look less tempting in a world where interest rates are rising.

Elon Musk’s Tesla is down about 70%, making the auto tech company the third-worst performer this year. Meta, Facebook’s parent company, also appears in the bottom 10 stocks — down 65%.

It’s a huge shakeup: At the start of this year, Tesla was the fifth most valuable company in the S&P 500 and Meta was sixth. Tesla is now the 11th most valuable company in the index and Meta is in 19th place.

Even Amazon, Apple and Microsoft – tech names that have become staples for investors – took a big hit as investors adjusted to an environment where prices rose.

There were some winners. The energy sector has returned more than 60% this year, significantly outperforming every other S&P 500 sector. No other sector has achieved even 5% so far this year.

Occidental Petroleum has been the biggest gainer in the S&P 500, up 122% so far this year. Constellation Energy is second, up 109%, and Hess comes in third with a gain of 94%.

As the shine faded from the markets, one of the biggest stories has been the catastrophic collapse of cryptocurrencies. After a dramatic run in 2021 to record highs (remember the dogecoin rally?), investors were confronted with an epic collapse. The implosion of parts of the industry once seen as relatively stable, such as Sam Bankman-Fried’s FTX exchange, sent traders scrambling for cover.

Crypto insiders acknowledge that trust will likely take years to rebuild. As regulators circle, the heady days of profiting from memes feel like a distant memory.