Last year was considered to be one of the most challenging years on the stock market for investors, as sticky inflation and back-to-back interest rate hikes by the Federal Reserve left investors feeling hawkish over the potential of a soft landing.
Further down the line, macroeconomic problems continued to give investors a hard time.
Many were faced with having to make difficult decisions and swiftly adjust their position, as a tight labor market, droves of layoffs in the tech industry and global political tension turned markets.
By the end of last year, the market experienced one of its worst-performing years on record.
In total, the S&P 500 fell by 19 percent, making it one of the 10 worst-performing years for the stock index in over 90 years. The tech-heavy NASDAQ was hit hardest, falling 5,179 points, or 33.1%. Both the Russell 2000 and the Dow Jones Industrials were also down 21.6% and 8.8%, respectively.
For much of last year, investors remained skeptical over the possibility of improving conditions, as analysts forecasted a mild recession to the close of 2022 and a full-blown economic recession for the better half of 2023.
It may seem as if the situation has slightly started improving on the back of cooler inflation data, which reached a 12-month low in March 2023, with the Consumer Price Index (CPI) dropping from 6% in February to 5% the following month.
While strong economic indicators have slightly helped turn the direction of the needle on the stock market, there’s still a long way to go before we can see the returns we once enjoyed in the pre-pandemic era.
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