Just How Badly Did Stock Markets Perform In 2022?

The stock market couldn’t resist giving investors a parting shot on Friday, posting losses on the last day of the year. However, despite finishing lower by between 0.1% and 0.25%, major market benchmarks ended the session well off their worst levels of the day.

That came as little consolation for those who’ve suffered through the bear market throughout 2022. Financial markets posted steep losses, with many indexes seeing their worst performance since the financial crisis in 2008. Below, you’ll see more about how various markets fared over the course of the year.

Image source: Getty Images.

Nasdaq Composite: Down 33.1%

The Nasdaq Composite (NASDAQINDEX: ^IXIC) was the worst performer among the indexes that most investors follow. Having started the year at 15,645, the Nasdaq closed Friday at 10,466. That was down 5,179 points, or 33.1%, excluding the effect of dividend payments on total return.

Most of the biggest companies in it failed to escape the carnage for the index, and four of the top eight companies suffered share-price declines of 50% or more for the year. The high-growth nature of so many businesses in the Nasdaq Composite left them particularly susceptible to rising interest rates, exacerbating the index’s underperformance compared to others.

Russell 2000: Down 21.6%

The Russell 2000 also did poorly, with the small-cap stock index going from 2,245 at the start of the year to close at 1,761. The 484-point decline worked out to 21.6% on a percentage basis, not including dividends on its constituent stocks.

Small companies are often more dependent on outside capital to finance their business operations, so rising borrowing costs and the less desirable environment for raising capital through stock offerings left small-cap stocks with little room to maneuver. As with large-cap indexes, there were sectors within the small-cap market that did well, most notably energy. Yet overall, investors have been nervous about how well smaller companies will be able to handle tough conditions.

S&P 500: Down 19.4%

The S&P 500 (SNPINDEX: ^GSPC) managed to hold up better than the Nasdaq and Russell 2000, but it still had its worst year since its 37% decline in 2008. The S&P closed the year at 3,840, down 926 points from its 2021 close of 4,766. That’s a percentage loss of 19.4%, excluding dividends paid by the constituent stocks.

The remarkable part of how the year went for the S&P 500 was just how different the performances of various sectors were. Three sectors — energy, utilities, and consumer staples — finished higher on the year, and healthcare stocks came close to breaking even. However, the worst drops were in communication services and consumer discretionary stocks, reflecting the reversal in some trends from earlier in the pandemic and worries about a potential recession ahead.

Dow Jones Industrials: Down 8.8%

The Dow Jones Industrial Average (DJINDICES: ^DJI) actually fared reasonably well compared to its peers. Finishing at 33,147, the Dow was down 3,191 points for the year, but in percentage terms, that worked out to a drop of 8.8%. That made 2022 the worst year for the Dow since 2008 as well, although it didn’t perform that much worse than modest losses in 2015 and 2018.

As with the S&P 500, the Dow featured its share of winners and losers. 10 of the Dow’s 30 components finished higher on the year. Yet three stocks finished down between 40% and 50%, showing how much disparity there was within the Dow.

Get ready for 2023

Investors are ready to put 2022 behind them and hope for better times in 2023. That’s not guaranteed, but what’s certain is that there’s a whole lot of disagreement about what a new year will bring and whether conditions on Wall Street will get better sooner rather than later.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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