General Market Commentary as of December 31, 2022
The decline in December partially offset a vigorous rally earlier in the final quarter of 2022. The S&P 500 ended the quarter up 7.08%, the Dow Jones Industrial Average gained 15.39%, while the Nasdaq Composite lost -1.03%. The US equity market posted positive returns for the quarter; large caps outperformed small caps and value outperformed growth. The same held true for the entire year. Developed markets outside of the US also posted positive returns for the quarter and outperformed both US and emerging markets.
Albeit smaller than the three interest rate increases we saw in Q3, the Federal Reserve ended the year in December with another 50 basis point bump. It is unclear how long the Fed will continue to hike interest rates to bring inflation down to its 2% target. Investors were faced with the challenge of a bear market compounded with the worst bond market performance in modern history. Fixed income posted historic declines rather than serving as a buffer against stock volatility as they have historically done in most down markets. It has been decades, going back to 1969, since the last time both stocks and bonds were negative in the same year.
This past quarter capped off what was a volatile ride in the market over the past year. The upcoming year expects to endure a lot of the same as pessimism remains rampant with growing recession talks. Though, the last few years have shown us that investors are rewarded for sticking to a long-term investment plan.
Market Recap
| Tot Return | 3-MO* | 12-MO* | 3-Year* | 5-Year* | Closing Value |
|---|---|---|---|---|---|
| S&P 500 | 7.08% | -19.44% | 5.92% | 7.51% | 3,839.50 |
| Dow Jones Industrial Average | 15.39% | -8.78% | 5.12% | 6.04% | 33,147.25 |
| NASDAQ Composite | -1.03% | -33.10% | 5.27% | 8.68% | 10,466.48 |
Source: Morningstar. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are unmanaged indexes. It is not possible to invest in an index. Past performance is no guarantee of future results. * Price only. Does not include dividends.
All overviews and commentary are intended to be general in nature and for current interest, educational purposes and factual reference only and are subject to change based on market and other conditions.
