Pain, few gains for investors as markets slumped in 2022

Investors found few, if any, safe havens in 2022, as central banks in the U.S. and around the globe raised interest rates for the first time in years to fight surging inflation, stoking fear of a global recession.

Consumers paid more for energy, food and just about everything else. Borrowing to buy a home or a car also got costlier.

On Wall Street, the benchmark S&P 500 index fell into a bear market by dropping more than 20% from the record high set in early January. The energy sector was the lone winner, while technology stocks tumbled.

A rout in the bond market was particularly painful turn for fixed-income investors. Cryptocurrency investors weren’t spared either.

— Alex Veiga

Here’s a look back on the key events in markets for 2022:

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INFLATION AND THE FED

Central banks’ response to inflation overshadowed financial markets in 2022 and could very well do so again next year. The Federal Reserve started raising rates in March, and would eventually raise rates seven times by a total of 4.25 percentage points.

By year-end, there were hopeful signs on inflation as prices for goods fell and rents started declining. But tough talk from the Fed in December took the steam out of a fourth-quarter rally for stocks.

— Chris Rugaber

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THE BEAR ROARS

Wall Street’s brutal year left few stocks unscathed, and the vast majority fell into a bear market under the weight of fast-rising interest rates.

After peaking on the very first trading day of 2022, it took about six months for the S&P 500 to drop more than 20%. The biggest losers were the stocks that had performed the best in the rally that followed the coronavirus crash. Seven out of 10 stocks in the S&P 500 fell in 2022, as of Dec. 21.

— Stan Choe

To see AP’s full coverage of the markets, go to: https://apnews.com/hub/financial-markets

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BOND MARKET BLUES

It was one of the worst years ever for bond investors.

Decades-high inflation meant the fixed payments coming from bonds in the future won’t buy as many groceries, gallons of gasoline or whatever else is rising in price. The Fed's decision to raise interest rates also hammered bond prices.

Historically bonds have held up better than stocks during economic downturns, offering some cushion for investors, but both tumbled in 2022.

— Stan Choe

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HOUSING MARKET SLUMPS

As 2022 began, the average rate on a 30-year mortgage was slightly above 3%, near historic lows. By October, the average rate on that 30-year home loan had soared above 7%, a 20-year high.

Higher mortgage rates combined with still-rising home prices to make it difficult for many would-be buyers to afford a home. Sales of previously occupied U.S. homes saw their biggest sales slump in more than a decade.

— Alex Veiga

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IS TESLA ON AUTOPILOT?

You can’t blame Tesla shareholders for feeling jilted. With CEO Elon Musk’s focus diverted by his acquisition of Twitter, Tesla shares lost more than half their value.

Most of Musk’s wealth is tied up in Tesla stock, which started falling in April when he disclosed a stake in Twitter. The falling stock price bumped Musk into second place on Forbes’ list of the world’s wealthiest people, behind Bernard Arnault, chairman of luxury goods maker LVMH.

— Tom Krisher

For full coverage of Elon Musk, Twitter and Tesla, go to https://apnews.com/hub/twitter-inc

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CONSUMERS FEEL THE PINCH

The highest inflation in four decades is hitting consumers right in their wallets.

Households coping with higher prices are likely depleting savings built up during the pandemic. Wages went up, although not at the same pace as inflation. Credit card debt ballooned, and rents increased.

Aggressive rate hikes by the Fed have pushed up the cost of borrowing money. But while the average rate on a credit card rose to 16.3% in August, according to the government, the average rate for a savings account is still just 0.2%.

— Cora Lewis

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UKRAINE WAR IMPACT

Russia’s invasion of Ukraine in February sent prices soaring for the commodities the world runs on: oil, natural gas, and wheat.

European prices for natural gas rose to 17 times their prewar levels after Russia choked off most supplies over the war. Global oil prices spiked as Western buyers shunned Moscow’s crude, sending Brent to over $120 per barrel in May. Record wheat prices spurred disastrous food inflation in poor countries.

By year end, oil had fallen back to around $80. U.S. drivers saw got some much-needed relief from high gasoline prices.

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CHINA DITCHES ZERO COVID

China’s economic growth and stock market slid in 2022 under pressure from pandemic controls and corporate debt.

The world’s second-largest economy shrank by 2.6% in the three months ending in June compared with the previous quarter after Shanghai and other industrial centers shut down to fight outbreaks. Forecasters say annual growth might fall below 3%, among the lowest in decades.

In response, the ruling Communist Party has eased off anti-disease restrictions and tried to revive the struggling real estate industry.

— Joe McDonald

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CRYPTO’S WILD RIDE

The year began with bitcoin above $45,000 and the crypto industry making further inroads among politicians and mainstream financial institutions. As 2022 ends, bitcoin is below $17,000 and the industry is reeling from another crisis.

FTX, the second-largest crypto exchange, unraveled in November after questions about its financial strength prompted customers to request large withdrawals. It filed for bankruptcy protection Nov. 11. Founder Sam Bankman-Fried was arrested in the Bahamas and faces criminal charges in the U.S.

— Ken Sweet

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THE STREAMING WARS

Netflix, Warner Bros. Discovery and other big entertainment companies tumbled in 2022 as streaming services struggled amid increased competition and rising inflation stifled advertising spending.

Consumers who'd been cooped up during the pandemic went out and turned off their streaming services. The sheer number of streaming options also left companies in a fierce fight for viewers’ attention.

— Damian Troise