Russian invasion of Ukraine When China’s strict COVID-19 policy It also contributed to inflation, disrupting the global economy as well as markets in Asia, Europe and the United States.
On Wall Street, the benchmark S&P 500 Index has had its worst start since 1970. his index fell into a bear market, down more than 20% from its all-time high in early January. The lone winner was the energy sector, which benefited from higher oil and gas prices. Tech stocks plunged after leading the market during the pandemic.
Borrowing money has become expensive. His 10-year Treasury yield, which affects interest rates on mortgages and other loans, surged from 1.51% at the beginning of the year to 4.22% in October.
Still, higher yields in the U.S. and abroad have caused the prices of older bonds already in investors’ portfolios to drop significantly. The bond crash was especially painful for bond investors.
Cryptocurrency investors were no exception. Bitcoin has lost more than half of its value and many leading companies have been embroiled in bankruptcy court.
Let’s take a look back at the major events in the market in 2022.
Inflation has been the main theme of the global economy this year. Gasoline prices in the US have reached $5 a gallon. Will the firm raise prices? stabilized the price, but lowered the price in each package.Europe fears natural gas shortages, prices rise above U.S.
The central bank response to inflation has cast a shadow over financial markets in 2022 and very likely will continue to do so next year. As the year turned, Federal Reserve officials acknowledged that inflation was not a temporary phenomenon. Russia’s invasion of Ukraine only exacerbated the situation by driving up energy and food prices.
Still, it wasn’t until March, when the US government announced that inflation was approaching 8%, that the Fed took action. As the year went on, the Fed became more aggressive, eventually raising rates by a total of 4.25 percentage points sevenfold.
US inflation appears to have peaked at 9.1% in June. By the end of the year, there was a silver lining as commodity prices began to drop and rents began to fall. However, the Fed’s tough inflation rhetoric at its final meeting of the year dampened the momentum in the fourth quarter stock market rally.
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Few stocks were unscathed in Wall Street’s brutal year, with most stocks slipping into a bear market under the weight of rapidly rising interest rates.
After peaking on the first trading day of 2022, it took the S&P 500 about six months to drop more than 20%. The biggest losers were the stocks that performed best in the rally following the coronavirus crash.
At the time, high-growth tech stocks hit new all-time highs thanks to the benefits of ultra-low interest rates. But in the sober light of 2022, these stocks suddenly looked their highest and most vulnerable as the Fed raised interest rates to his highest level in 15 years.
However, the pain was less discriminating. As of Dec. 21, 7 of the 10 S&P 500 stocks have fallen in his 2022. Analysts Expect More Pain In early 2023, before things took a turn for the better.
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it was one of worst year ever For fixed income investors.
Decades of high inflation meant that fixed payments from future bonds wouldn’t buy as many groceries, gallons of gasoline, or anything else whose price was rising.
The Federal Reserve’s decision to raise interest rates also hit bond prices. As newly issued bonds were paying more interest, the older bonds in many investors’ portfolios suddenly became much less attractive due to their lower yields.
The largest fixed income fund by asset size, one of the broad market-tracking Vanguards, is down 12.5% in 2022 as of Dec. 20. This is the worst year since its inception in 1987.
Historically, bonds have held up better than stocks during recessions, providing investors with some cushion, but in 2022 they both plummeted.
As 2022 began, the domestic housing market was still hot.
For more than two decades, house hunters have competed for the number of homes on the market, fueling a bidding war that has driven prices up sharply. The average 30-year mortgage rate is just above his 3% and close to historic lows.
Then, as the Federal Reserve began raising short-term lending rates to keep inflation in check, expectations of higher interest rates spurred on, and mortgage rates began to rise. By October, the average 30-year mortgage rate had topped 7%, his highest in 20 years.
Higher Mortgage Interest Rates and Higher House Prices make it difficult Many prospective buyers can afford to buy a home.Sales of previously occupied US homes saw their biggest sales slump Over 10 years.
You can’t blame Tesla shareholders for being upset.
CEO Elon Musk has bought Twitter and seems obsessed with rebuilding the social media company. Musk’s shift in focus has seen Tesla stock lose more than half of its all-time high for the year.And Tesla’s dominance electric car market Declining.
Most of Musk’s wealth is tied to Tesla shares, which began to decline in April when he revealed his stake in Twitter. His stock market crash has pushed Musk to number two on Forbes’ list of the world’s richest people, behind cosmetics mogul Bernard Arnault.
After acquiring Twitter in October, Musk cut half its staff, quarreled with an official others.
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The highest inflation in the last 40 years hit the consumer in their purse.
Households, especially those with lower income levels, are likely to have used up their accumulated savings during the pandemic, which could cause further pain if the economy hits a recession. Credit card debt has skyrocketed and rents have risen in 2022, but there are signs that housing costs are coming down.as President Biden Promised Student Borrower Relief A debt forgiveness policy of up to $20,000 has been struck in court this year.
Wages rose, but not at the same pace as inflation. Aggressive interest rate hikes by the Federal Reserve It pushed up the cost of borrowing money. According to the government, the average interest rate on credit cards rose from 14.5% at the beginning of the year to 16.3% in August, while the average interest rate on savings accounts is still stuck at 0.2%. 0.9% for a 1-year CD.
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Russia’s invasion of Ukraine in February sent prices of commodities that support the world, such as oil, natural gas and wheat, skyrocketing.
European prices for natural gas rose 17 times their pre-war levels after Russia cut off most supplies during the war. The result was an energy crisis that pushed inflation to record levels and scrambled governments and utilities to find alternative gas supplies ahead of the winter heating season.
Global oil prices soared as Western buyers shunned Moscow crude, pushing Brent above $120 a barrel in May. Europe banned most Russian oil imports in December, and G7 democracies imposed a price cap of $60 a barrel on Russian exports.
Meanwhile, record wheat prices have fueled devastating food inflation in poor countries.
by the end of the year, cheap crude oil, natural gas and electricity Provided drivers and homeowners with a little peace of mind.
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China’s economic growth and stock market plunge in 2022 under pressure from pandemic control and corporate debt, prompting the ruling Communist Party to ease anti-disease regulations and attempt to revive the struggling real estate industry. rice field.
China, the world’s second largest economy, contracted by 2.6% in the three months to June compared to the previous quarter. This is because Shanghai and other industrial centers have been closed for up to two months to combat the spread of the infection.
Forecasters say annual growth could fall below 3%. To ease the economic burden, the ruling party has ended testing of millions of people and stopped requiring supermarkets and other businesses to track the health of their employees and customers. is also trying to revive China’s biggest economic engine, real estate, by lending more to apartment buyers, while trying to prevent a resurgence in developer borrowing.
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The year started with Bitcoin and cryptocurrency industry above $45,000 become more pervasive among politicians and mainstream financial institutions. As 2022 ends, Bitcoin will drop below his $17,000 mark, the industry “savior” will be under house arrest, and Washington will be battling over how to regulate cryptocurrencies.
with A Steady and Sharp Decline in Crypto Prices In the background, dominoes began to fall With the May Fall of Terra, so-called stablecoins. Investors lost tens of billions of dollars and many cryptocurrency companies faced financial collapse.in steps Sam Bankman-Friedthe young founder of crypto exchange FTX, bailed out crypto lender BlockFi and crypto firm Voyager, earning comparisons to the original JP Morgan.
Those accolades vanished when FTX was unraveled in November. Questions about its financial strength have led customers to request large withdrawals. Overwhelmed and found to be underfunded, FTX Files For Chapter 11 Bankruptcy Protection Bankman-Fried on November 11th Arrested in Bahamas and handed over to the United States to face criminal and civil complaints Related to the collapse of FTX.
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Netflix, Warner Bros. Discovery and other big entertainment companies plunged in 2022 as streaming services struggled as increased competition and rising inflation held back ad spend.
Streaming services have had to deal with returning to normal for many people stuck at home due to lockdowns and other restrictions during the height of the COVID-19 pandemic. With a huge number of streaming options, companies have put up a fierce battle for viewers’ attention.
Streaming giant Netflix lost about half its value After the viewership plummeted in the first half of this year. The diversified entertainment giant’s stock has held up better than most of its competitors, even as Disney struggled with declining advertising revenue.
Warner Bros. Discovery also struggled with advertising revenue, Some Movies Including “Batgirl” Because we changed our strategy and tried to cut costs.
