US market closes 2022 with worst result since 2008

The US stock market ended this Friday (30th) its worst year since the 2008 US real estate crisis. is behind this result.

In addition to the competition that fixed income represents for the stock market, analysts have come to fear that the tightening of the credit supply could result in a global recession in 2023, which would be an even worse scenario for companies and that drove away even more investors. of so-called risk markets.

A benchmark for shares traded on the New York Stock Exchange, the S&P 500 indicator closed the year down 19.5%, the worst annual result since the 38.5% drop 14 years ago.

With an even bigger dip, the Nasdaq index has lost 33% this year, coming close to the 40.5% drop in the year of the financial crisis. It is in this segment that medium-sized companies with great growth potential are located, many in the technology area. It is a sector sensitive to high interest rates because cheap credit is necessary for the expansion of these businesses.

The technology sector, in general, tends to be punished by high interest rates. Shares in Meta, which owns Facebook, fell about 64% in 2022, the worst year for the shares. In this case, the company still faced other problems, such as competition from the Chinese short video app TikTok.

Comprised of 30 high-value companies, the Dow Jones has fallen 8.78% this year. Although it is more resistant to rising interest rates, since this type of company is less dependent on credit, the index also recorded its worst result in 2022 since it plummeted by almost 34% in 2008.

In a challenging scenario for the stock market, the exchanges managed to swim against the current, which have a large share of exporters of raw materials whose supply was threatened, mainly due to the beginning of the War in Ukraine. This is the case in Brazil.

The Ibovespa, reference for the Brazilian Stock Exchange, ended the 2022 negotiations this Thursday (29) with an accumulated annual increase of 4.69%. Companies in the field of oil and gas production and exploration were among the highlights of the Brazilian stock market.

The team of strategists at XP Investimentos described this favorable situation for Brazil as a typical case of “tina”, an expression that has become fashionable in the American market and which means “there is no alternative”.

The global stock slump took managers by surprise. Despite expecting there to be some pullback in the stock market after three consecutive highly successful years, the year 2022 turned out to be worse than initially imagined.

Even the chairman of the Fed (Federal Reserve, the US central bank), Jerome Powell, took some time to recognize that inflation would not be transitory and that, as he said in August at the world symposium of central bankers, fighting the crisis would be painful.

“I Think [2022] was probably one of the toughest years to get right for market participants,” Hani Redha, global multi-asset portfolio manager at PineBridge Investments, told The Wall Street Journal.

European stocks have also fallen in a year marked by geopolitical tensions and fears of recession, as central banks raise interest rates there as well.

The exception was the London Stock Exchange, whose strong exposure to commodities resulted in a slight rise of around 0.7%. Furthermore, the weak pound also helped the UK to gain from its export sector.

The Stoxx 600 index, which is a benchmark for stocks traded in Europe, fell 12.9% in 2022 and posted its worst performance since 2018.

The European Central Bank eased the pace of its rate hikes earlier this month, but stressed that a significant tightening was yet to come and laid out plans to drain cash from the financial system.