The rise in rates and the fall in technology drag Wall Street to close the worst year since 2008 | Economy

An operator, this Friday in the last session of the year on Wall Street (New York).
An operator, this Friday in the last session of the year on Wall Street (New York).TIMOTHY A. CLARY (AFP)

The rise in interest rates to tame inflation, the collapse of cryptocurrencies and the gloomy horizon of technology companies, which have announced mass layoffs, have contributed, among other factors, to making 2022 the worst year on Wall Street since 2008. that of the Great Recession. The fear of a recession in 2023 if the rise in the price of money cools the economy too much has withdrawn investors, although some analysts venture that the market will tend to be bullish next year, although with ups and downs.

The Dow Jones Industrials, which groups the 30 largest companies in the country, lost an accumulated 8.8% this year. The selective S&P 500 starred in a steeper fall, dropping almost 20 points, and the tech-heavy Nasdaq beat worst expectations, losing 33%. After more than two years with the wind in their tails due to the pandemic, which instituted teleworking and gave wings to digital entertainment, technology companies and their profitable trail of startups envision 2023 with gloomy forecasts. Among the big ones, the hits of Tesla stand out, which has lost 65% of its stock market value, and Meta, 64%.

After a banner year for equities in 2021, in which the S&P 500 hit back-to-back record highs, few anticipated the fall that would come this year. Sell ​​orders have been the general trend, a trend that has not even been able to remedy the wave of purchases in the last hours of this Friday’s session. The Nasdaq 100 also closed lower, losing a third of its value in 2022, as tech stocks have been particularly vulnerable to rising rates. It has also been the worst year in more than a decade for equities and fixed income, and a particularly volatile period for commodities. The dollar, however, has appreciated against other currencies, especially against the euro.

The only sector that has been catapulted to green has been energy, with a rise of 56% supported by the increase in oil and gas prices as a result of the war in Ukraine. Despite the revenue it has brought to shareholders, energy, along with food, has been responsible for inflation running amok this year in the US to its highest level in four decades.

The Twitter controversy and the bankruptcy of FTX

Inflation, which for a good part of 2021 was seen as a transitory phenomenon by the Federal Reserve -a miscalculation that the Fed Chairman himself, Jerome Powell, has recognized-, took hold in 2022, with a peak of 9, 1% last June, and in March forced the central bank to raise rates, which were frozen at around 0% during the pandemic to prevent the economy from derailing. After three consecutive increases of 0.75% basis points, the Fed moderated the pace in December, with the increase of only half a percentage point, but the forecasts for 2023 do not rule out a cooling of the labor market, with a rise in unemployment and, eventually, a recession that many analysts place in the second half of 2023.

Factors such as the change in ownership of Twitter, with the noisy entrance of Elon Musk in October, after which the company went public, and the fraud of the cryptocurrency firm FTX have especially shaken the foundations of Wall Street, in case the year it would not have been in itself agitated. The wave of massive layoffs announced by Musk after landing on the social network, which he acquired for 44,000 million dollars, has had widespread replicas in large technology companies such as Meta, Amazon, Google, Microsoft or Netflix, which have also frozen hiring. The change in consumer habits after the pandemic has significantly cut the benefits of these firms.

2022 has also been the year of the bubble burst crypto. The decline has been driven, among other factors, by the FTX platform scandal, one of the most serious in recent decades, and the arrest and indictment of its founder, Sam Bankman-Fried, for fraud. FTX filed for bankruptcy in November. Bitcoin, the most widely used cryptocurrency, has lost 65% of its value this year, in addition to arousing increasing rejection for its environmental impact. In a pioneering move, New York in November became the first state in the country to ban fossil fuel-powered cryptocurrency mining.

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