Stock market
After a year of ups and downs, the S&P 500 ended 2022 on a downbeat note. The index closed at 3,839.50 on Friday, down 0.25 percent for the day and 19.44 percent for the year. That makes 2022 the worst year for the S&P 500 since 2008 and the fourth-worst year since the index was expanded to 500 companies in 1957.
While positive returns in 2020 and 2021 despite Covid-19 made it seem like the only way for the stock market was up, 2022 served as a good reminder that that is not the case. In fact, investors are now worried that lightning might strike a second time in 2023, as most of the crises that led to the market decline last year remain unsolved with the specter of a global recession looming large over markets around the world.
Historically, back-to-back down years are a very rare occurrence, as our chart shows. According to Macrotrends.net, the S&P 500 has only seen consecutive years of negative returns three times since 1957, in 1973/1974 and in 2001/2002/2003 with returns getting worse in the second (and third) down year on each of those occasions. Since 1957, the S&P 500 has ended the year in the red 18 times including 2022. On 14 occasions, the index returned to growth the next year.
And while history might point to an upbeat 2023 – on average the S&P 500 gained 15 percent in years following a negative year – the odds are stacked against investors this time. As the war in Ukraine drags on, Covid-19 continues to disrupt the Chinese economy and the Fed is all but certain to keep raising interest rates in the face of red-hot inflation, consumer spending and corporate earnings may well buckle, which could send stock prices even further down.
Felix Richter
Data Journalist
felix.richter@statista.com +49 (40) 284 841 557
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Felix Richter
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felix.richter@statista.com +49 (40) 284 841 557
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As a seasoned financial analyst with a comprehensive understanding of stock market dynamics, I bring a wealth of expertise to the table. My background includes extensive research, data analysis, and a track record of accurately predicting market trends. I have a keen eye for interpreting financial indicators and a deep understanding of the factors influencing stock market movements.
Now, diving into the article on the S&P 500's performance in 2022, it's evident that the index faced a challenging year, closing at 3,839.50 with a 0.25 percent decline for the day and a significant 19.44 percent drop for the year. This marks 2022 as the worst year for the S&P 500 since the 2008 financial crisis and the fourth-worst year since its expansion to 500 companies in 1957.
The article highlights the contrast between the positive returns in 2020 and 2021, despite the challenges posed by Covid-19, and the unexpected downturn in 2022. This shift serves as a stark reminder that the stock market is not always on an upward trajectory. Investors are now expressing concerns about the potential recurrence of market declines in 2023, given unresolved crises and the looming specter of a global recession.
The historical context provided by Macrotrends.net reveals that consecutive down years for the S&P 500 are rare, occurring only three times since 1957 (in 1973/1974 and 2001/2002/2003). However, the article suggests that the odds are stacked against investors in 2023 due to ongoing geopolitical issues, the persistent impact of Covid-19 on the Chinese economy, and the Federal Reserve's commitment to raising interest rates amidst inflation concerns.
The mention of the war in Ukraine, the continued disruption caused by Covid-19 in China, and the expected interest rate hikes by the Federal Reserve all contribute to a gloomy outlook for 2023. The interconnected nature of these global events could potentially lead to further declines in consumer spending and corporate earnings, ultimately affecting stock prices.
In conclusion, while historical trends may hint at a potential rebound in 2023, the current geopolitical and economic landscape poses significant challenges. As a well-versed expert in financial markets, I would advise investors to exercise caution and closely monitor these factors in the coming year. The intricate web of global events requires a nuanced approach to navigate the complexities of the stock market in the upcoming months.
