2022 is over. Take a breath.
Investors were understandably eager to ring the bell on the stock market’s worst year since 2008, with the S&P 500
falling 19.4%, the Dow Jones Industrial Average
dropping 8.8% and the Nasdaq Composite
Adding to the pain, the bond market was also a disaster, with some segments seeing their biggest annual losses in history while U.S. Treasury prices slumped, sending yields soaring.
That offered a rare double whammy for investors, who usually see portfolios cushioned by bonds when equities suffer.
So now what? The flip of the calendar doesn’t make the factors that drove market losses in 2022 go away, but it offers investors an opportunity to think about how the economy and the markets will evolve in the year ahead.
A rate shock as the Federal Reserve ratcheted up interest rates at a historically rapid pace in its effort to rein in inflation set the tone in 2022. A return to higher rates — and what may be the end of a four-decade era of falling interest rates — is expected to reverberate in 2023 and beyond.
The Tell: End of 40-year era of falling interest rates is crucial ‘sea change’ for investors: Howard Marks
While inflation, still elevated, shows signs it has peaked, the market was robbed of a seasonal rally heading into the new year by fears the Fed’s continued…
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