- Wall St sees first annual decline in four years
- US-listed shares of Shaw Communications jump
- Indexes Down: Dow 0.71%, S&P 0.80%, Nasdaq 0.89%
Dec 30 (Reuters) – Wall Street was dragged lower by losses in growth and health care stocks on the last trading day of a difficult year marked by aggressive rate hikes to curb inflation, the war between Russia and Ukraine and fears of a recession.
The three main indices are on the verge of annual declines for the first time after three consecutive years of gains, as an era of loose monetary policy came to an end following the fastest rate increase by the Federal Reserve since the 1980s.
The benchmark S&P 500 (.SPX) has lost 20% this year and the tech-heavy Nasdaq (.IXIC) is down 34%, putting them on track for their biggest annual decline since the 2008 financial crisis, largely driven by a defeat in technology stocks.
Most price-sensitive technology and growth stocks such as Apple Inc (AAPL.O)Amazon.com Inc (AMZN.O)Alphabet Inc (GOOGL.O) and Meta Platforms Inc (META.O) fell between 0.7% and 1.4% on Friday as US Treasury yields rose.
The tech sector has been pummeled this year with 29% declines, while energy (.SPNY) has posted tremendous annual gains of 58% due to an increase in oil prices.
Growth stocks were pressured by rising yields for much of 2022, underperforming their economically linked peers in a reversal in a trend that has persisted for most of the past decade.
The S&P 500 growth index (.IGX) is down about 30.5% this year, while the value index (.ivx) is down just 7.7%, with investors favoring sectors with high dividend yields and stable incomes, such as energy.
“We could see where value outperforms growth in the next few years,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
“A lot of that is just a rotation from very expensive stocks to stocks that are a little cheaper and you see better growth opportunities in some of those other sectors.”
The focus has now shifted to the outlook for corporate earnings in 2023, as investors become increasingly concerned about the likelihood of a sharp economic downturn as a result of interest rate hikes.
Major Wall Street indices closed higher on Thursday after unemployment data indicated that Fed policy tightening was beginning to take its toll on the US labor market.
Still, signs of resilience in the US economy have fueled concerns that interest rates could remain high for longer, though easing inflationary pressures have raised hopes of moderate rate hikes.
Money market participants see a 65% chance of a 25 basis point hike at the Fed’s February meeting, with an expected peak of 4.97% by mid-next year.
At 11:51 a.m. ET, the Dow Jones Industrial Average (.DJI) fell 237.34 points, or 0.71%, to 32,983.46, the S&P 500 (.SPX) fell 30.84 points, or 0.80%, to 3,818.44, and the Nasdaq Composite (.IXIC) decreased by 93.36 points, or 0.89%, to 10,384.73.
US-listed shares of Shaw Communications Inc rose 9.4% after Canada’s antitrust court found rival Rogers Communications Inc. (RCIb.TO) C$20 billion ($14.77 billion) bid for the telecom company.
Falling emissions outnumbered progress at a ratio of 2.51 to 1 on the NYSE and a ratio of 1.73 to 1 on the Nasdaq.
The S&P index registered no new highs in 52 weeks and no new lows, while the Nasdaq recorded 45 new highs and 79 new lows.
Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Edited by Vinay Dwivedi, Arun Koyyur and Sriraj Kalluvila
Our standards: The Thomson Reuters Principles of Trust.