This Weekly Market Update reviews the top market headlines: 2022 Recap

2022 Recap

Financial assets suffered widespread losses in 2022 as a multitude of headwinds emerged during the year. Foremost among these was a series of aggressive interest rate hikes enacted by the Federal Reserve in a bid to quell the highest inflation readings in 40 years. Geopolitical developments and cooling global economic growth further clouded the investment landscape. Safe havens were few as nearly all asset classes experienced negative returns.

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U.S. Equities: U.S. stocks declined in each of the first three quarters of the year before staging a moderate rebound in Q4. For the year, the broad-market S&P 500 index posted a total return of -18.1%. All S&P economic sectors lost ground on the year with the exception of energy and utility stocks (+65.7% and +1.6%, respectively). Rising interest rates were particularly detrimental to growth stocks (Russell 1000 Growth index, -29.1%), which vastly underperformed value stocks (Russell 1000 Value index, -7.5%).

International Equities: Foreign stocks fared slightly better than U.S. stocks in 2022 but struggled in their own right (MSCI ACWI ex USA index, -16.0%). Developed markets (MSCI EAFE index, -14.5%) outperformed emerging markets (MSCI Emerging Markets index, -20.1%), as the latter was dragged down by weakness in Chinese stocks. (All international stock index returns are quoted in U.S. dollar terms.)

Fixed Income: Bonds posted sharp declines in 2022 as the Federal Reserve raised the federal-funds rate target range seven times and interest rates rose dramatically across the yield curve. The Bloomberg Barclays U.S. Aggregate index declined 13.0% on the year, the steepest annual decline recorded since the index's inception in 1976. The yield curve remained inverted (shorter-term yields exceeding longer-term yields) throughout the second half of the year.

Commodities: Commodities were one of the lone bright spots in 2022 (Bloomberg Commodity index, +16.1%), largely on the back of strength in the energy complex.

As of January 3, 2023 Month-To-Date Quarter-To-Date One-Year
MSCI All Country World -3.93% 9.76% -18.36%
S&P 500 -5.76% 7.56% -18.11%
Russell 2000 -6.49% 6.23% -20.44%
MSCI EAFE 0.08% 17.34% -14.45%
MSCI Emerging Markets -1.41% 9.70% -20.09%
FTSE NAREIT Equity -5.14% 5.24% -24.37%
Bloomberg Commodity -2.45% 2.22% 16.09%
Barclays U.S. Aggregate -0.45% 1.87% -13.01%

Data from Morningstar Direct. Returns for periods greater than one year are annualized. Gallagher Fiduciary Advisors, LLC (“GFA”) is an SEC Registered Investment Adviser that provides retirement, investment advisory, discretionary/named and independent fiduciary services. GFA is a limited liability company with Gallagher Benefit Services, Inc. as its single member. GFA may pay referral fees or other remuneration to employees of AJG or its affiliates or to independent contractors; such payments do not change our fee. Securities may be offered through Triad Advisors, LLC (“Triad”), member FINRA/SIPC. Triad is separately owned and other entities and/or marketing names, products or services referenced here are independent of Triad. Neither Triad, Arthur J. Gallagher & Co., GFA, their affiliates nor representatives provide accounting, legal or tax advice.