Updated 4:15 pm EST
Stocks ended lower Friday as global stocks closed out their worst year in more than a decade, pummeled by recession concerns, China's covid crisis and the relentless run of interest rate hikes from central bank around the world.
The Dow Jones Industrial Average ended down 73 points, 0.22%, 33,147, while the S&P 500, which is down 19.24% for the year, lost 0.25%. The Nasdaq, down 33.03% for the year, slipped 0.11%.
The MSCI World index, the broadest measure of global shares, is set for a 20.3% decline this year, its worst performance since 2008, while shedding more than $18 trillion in equity value.
U.S. stocks, on pace for their worst year since the global financial crisis, have been hit by a series of outsized Federal Reserve rate hikes which has lifted borrowing costs, clipped business investment and hammered the domestic housing market.
The Fed, in fact, executed seven rate hikes this year, taking its key lending rate to a range of 4.25% to 4.5%, which central banks across the 10 most actively traded currencies in the world combined for a total of 54 rate increases, with only the Bank of Japan keeping its benchmark levels unchanged. Emerging market central banks combined for a collective total of 93 rate hikes.
The knock-on effect has lifted the U.S. dollar index, which tracks the greenback against a basket of its global peers, some 8% higher this year, marking its strongest annual performance since 2015. The index was last seen 0.28% lower on the session at 103.5754.
“Global stock markets fell by a staggering 18% in 2022 on average. Bond markets – traditionally a safe haven in times of volatility – have declined by 12% averagely. And as corrections go, the cryptocurrency one this year has been particularly punishing," said Nigel Green, CEO of London-based financial advisory deVere Group.
“The downward moves of financial markets have wiped tens of trillions of dollars in wealth over the last year, he added. "This is why investors and savers are more alert than ever to the major themes that will define the year ahead,” citing slowing inflation, China's reopening, a weaker U.S. dollar and further rotations into growth stocks.
Trading volumes are likely to be thin on the final session of the year, given the lack of major economic data releases and the pending market holiday on Monday, Jan. 2, with investors likely tracking moves in the bond market for broader direction.
Benchmark 10-year notes edged higher to 3.879% in late New York trading, while 2-year notes bumped to 4.428% following a busy week for new auctions that saw $85 billion in new paper hit the market.
Overnight in Asia, Japan's Nikkei 225 ended the year down 11%, while the Europe-wide Stoxx 600 closed 1.3% lower in Frankfurt to end the year down 12.9%, its worst annual performance since 2018.
