Welcome back to the Monthly Market Wrap from YCharts, where we break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.
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December 2022 Market Summary
Stocks were mostly negative in the final month of 2022. The Dow Jones Industrial Average fell 4.1%, the S&P 500 dipped 5.8%, and the NASDAQ sank 8.7%. Continuing rate hikes from the Federal Reserve, investors’ unease surrounding Q4 earnings, and uncertain outlooks for 2023 halted the two-month equities rally. Only Emerging Markets finished December in the black, up 0.1%. The Dow closed out 2022 down 6.9%, the S&P ended the year off 18.1%, and the NASDAQ finished 32.5% lower.
While all eleven S&P 500 sectors were higher in both October and November, they all finished lower in December. Energy and Utilities were the lone gainers on the year, ending 2022 up 64.2% and 1.4%, respectively. Consumer Discretionary’s December-worst 11.4% decline also made it the worst-performing sector in 2022, down 37.6%.
MoM Treasury yields rose across the board with the exception of the 1-Year Treasury Bill, which declined by one basis point. The 6-Month Treasury Bill stood atop the US Treasury yield curve at 4.76%. The 10 Year was at the bottom, though its increase of 20 basis points to 3.88% was the largest MoM increase of all US treasuries. Worldwide, the long-term bond rates of Spain, Germany, and Italy all rose by over 50 basis points in December.
Large-cap value stocks, represented by the iShares Russell 1000 Value ETF (IWD), slipped 4.0% in December after logging two consecutive months of gains. Large-cap growth stocks (IWF) sank 7.7%, while mid-cap growth (IWO) and value (IWN) stocks ended December down 6.3% and 6.6%, respectively.
Quite consistently throughout 2022, value was the relatively better equity class, and particularly large-cap value. IWD ended 2022 down 7.7%, whereas its mid-cap counterpart IWN was off 14.8%. As for growth, large-caps fared worse in 2022, plummeting 29.3% on the year vs. 26.3% for mid-cap growth.
November’s unemployment rate was unchanged at 3.7%, but the labor force participation rate dipped another 0.1 percentage point to 62.1%. Labor force participation stands 1.2 points below its February 2020 high. 263,000 jobs were added in November, which topped nonfarm payroll expectations of 200,000 but paled in comparison to November 2021’s gain of 647,000.
The price of gold rose 3.4% MoM to $1,813.80 per ounce as of December 30th, making for a 0.4% increase in 2022. Both WTI and Brent tumbled by double-digit percentages within December but rallied back to end the month down only slightly. WTI’s spot price settled at $79.45 at the end of December, down 1.3% MoM, and Brent slipped 3.7% to $82.45. Nonetheless, the intra-month decline in crude oil prices brought savings at the pump. The average price of regular gas fell 44 cents (-12.2%) in December to $3.20 per gallon.
After historic gains in 2021, cryptocurrencies logged equally historic declines in 2022. Ethereum fared the worst in 2022, plummeting 67.7% to settle at $1,199. Bitcoin tumbled 64.8% to $16,604. Binance Coin lost slightly over half its value in 2022, down 52.6% to a price of $245.84 per coin.