Wall Street Registers Biggest Drop Since 2008

US stocks closed out 2022 lower on Friday (Saturday, Dec. 31, 2022, in Manila), capping a year of sharp losses driven by aggressive interest rate hikes to curb inflation, recession fears, the Russia-Ukraine war, and rising concerns over COVID cases in China, Echo Wang reported for Reuters.

Photo Insert: Wall Street's three main indices booked their first yearly drop since 2018 as an era of loose monetary policy ended with the Federal Reserve's fastest pace of rate hikes since the 1980s.

Wall Street's three main indices booked their first yearly drop since 2018 as an era of loose monetary policy ended with the Federal Reserve's fastest pace of rate hikes since the 1980s.

The benchmark S&P 500 has shed 19.4% this year, marking a roughly $8 trillion decline in market cap. The tech-heavy Nasdaq is down 33.1%, while the Dow Jones Industrial Average has fallen 8.9%.

The annual percentage declines for all three indices were the biggest since the 2008 financial crisis, largely driven by a rout in growth shares as concerns over Fed's rapid interest rate hikes boost US Treasury yields.

"The primary macro reasons ... came from a combination of events: the ongoing supply chain disruption that started in 2020, the spike in inflation, the tardiness of the Fed beginning its rate tightening program in the attempt to corral the inflation," said Sam Stovall, chief investment strategist at CFRA Research.

He also cited economic indicators pointing to recession, geopolitical tensions including the Ukraine war, and China's surging COVID cases and uncertainties over Taiwan.

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