U.S. stock investors could not be more eager to turn the page on 2022, a brutal year dominated by market-punishing Federal Reserve rate hikes designed to tamp down the steepest inflation in 40 years.
The S&P 500 (.SPX) is down nearly 20% year-to-date with only a few trading days left in 2022, on pace for its biggest calendar-year drop since 2008. The carnage has been even more severe for the Nasdaq Composite (.IXIC), which had tumbled by nearly 34% so far for the year.
High-profile casualties include the once-soaring shares of Amazon.com Inc (AMZN.O), which have slumped around 50% this year, while those of Tesla Inc (TSLA.O) are down some 70% and Facebook parent Meta Platforms Inc (META.O) shares have lost about 65%. Meanwhile, energy stocks (.SPNY) have bucked the trend by posting eye-popping gains.
Inflation, and the Fed's degree of aggressiveness in trying to contain it, will likely remain a critical factor driving equity performance as 2023 gets under way. But investors will also be watching for fallout from higher interest rates, including how tighter monetary policy ripples through the economy and whether it makes other assets more competitive with stocks.
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