(Bloomberg) — Big tech sent stocks lower again on the final trading day of 2022, capping the worst year in more than a decade for global stocks and bonds.
Most Read by Bloomberg
The S&P 500 fell, taking the shine off its best Thursday rally since December and leaving it down nearly 20% in 2022. The tech-heavy Nasdaq 100 fell the most among benchmarks on Friday, poised to lose a third of its value this year as technology stocks emerged as some of the most vulnerable to rising interest rates.
Treasuries fell, sending yields higher across the board. The dollar continued to slide against major rivals, with the Bloomberg Dollar Spot Index falling to a six-month low. The yen rose even as the Bank of Japan unveiled an unprecedented third day of unplanned bond purchases.
This week’s losses have dampened hopes for a rally to end 2022, a year when inflation takes hold, wiping out a fifth of the value of global stocks, the worst performance since the financial crisis. Bonds lost 16% of their value, the biggest decline since at least 1990 for a leading gauge, as central banks raced to slow rising consumer prices by raising interest rates around the world.
“We’ve never seen a market environment like this where stocks and bonds fell at the same time,” said Art Hogan, chief market strategist at B. Riley Wealth. “The good news is that we will soon be putting the year in the rear-view mirror. The bad news is that 2023 could be tough, at least for the first few months. Weaker economic trends are likely to take shape heading into 2023 as the Fed tackles inflation, but a mild recession could help set stocks up for a better second half.”
After a banner year for stocks in 2021, when the S&P 500 climbed to consecutive record highs, few predicted the subsequent selloff. But after rising to another all-time high on Jan. 3, fortunes quickly turned as the Federal Reserve signaled its determination to rein in inflation. That heralded the start of the most aggressive rate hike in decades, sending stocks and bonds crashing in their wake.
As U.S. stocks were dragged into a bear market, the decline in Treasuries pushed benchmark 10-year yields to 3.9 percent from 1.5 percent earlier in the year. This could present a different outlook for fixed income in 2023 and a revival of the widely followed 60/40 portfolio, which faltered in 2022.
“While stocks will struggle with a slowdown in economic activity and loss of inflated earnings from inflation, bonds are earning decent income with upside potential as yields fall from their peak,” said Bryce Doty, senior portfolio manager for Sit Investment Associates. “The Fed is almost done raising rates — we expect no hike at the May Fed meeting — and inflation is slowing.”
Concerns about the spread of Covid-19 that emerged this week are still weighing on markets. The European Commission has asked EU member states to review Covid testing and sequencing procedures and consider scaling them up again amid heightened concern about the virus spreading from China.
Elsewhere, emerging market stocks were set for their first weekly gain in three, although the benchmark remains on track for a more than 20% decline in 2022.
Oil fell, adding to a three-day streak of losses on worries about rising crude inventories and concerns that rising Covid-19 infections in China will slow demand in one of the world’s biggest oil importers. Bitcoin ends the year flat, down about 0.8% to bring its 2022 decline to more than 64%.
Some of the major moves in the markets:
Stock up
-
The S&P 500 was down 0.7% as of 1:03 p.m. New York time
-
Nasdaq 100 down 0.8%
-
Dow Jones Industrial Average fell 0.6%
-
MSCI world index fell 0.5%
Currencies
-
The Bloomberg Dollar Spot Index fell 0.5%
-
The euro rose 0.4% to $1.0708
-
The British pound rose 0.3% to $1.2096
-
The Japanese yen rose 1.6% to 130.93 per dollar
Cryptocurrencies
-
Bitcoin fell 0.4% to $16,521.5
-
Ether was little changed at $1,194.85
Bonds
-
The 10-year Treasury yield rose two basis points to 3.84%
-
Germany’s 10-year bond yield rose 13 basis points to 2.57%
-
Britain’s 10-year bond yield rose one basis point to 3.67%
Goods
This story was created using Bloomberg Automation.
–With assistance from Jan-Patrick Barnert, Richard Henderson, Wildana Heyrich, Robert Brand and Peyton Forte.
Most Read by Bloomberg Businessweek
©2022 Bloomberg LP
#Tech #drags #stocks #alltoofamiliar #run #Markets #Overview
