Medicare Agent News: A Year to Forget

Friday, December 30, 2022

A Year to Forget

By Connor Smith | Friday, December 30

There's Always Next Year. From the collapse of FTX and much of the crypto ecosystem, to Elon Musk's Twitter takeover, and every wild stock market swing along the way, this year kept us busy at Review & Preview.

The major U.S. indexes struggled as investors wisened up to the end of the easy money era. Rising interest rates amid the Federal Reserve's war against inflation weighed on stocks, especially riskier growth-focused assets. Things wrapped up today with a bit of a whimper.

The S&P 500 fell 0.3% to lock in a 19.4% drop for 2022. That's the large-cap benchmark's fourth-worst annual decline since its official inception in 1957, according to Dow Jones Market Data. Those numbers include a 7.1% gain in the fourth quarter. The index snapped three-straight years of gains.

The Dow Jones Industrial Average fared somewhat better. It fell 0.2% today to close out 2022 down only 8.8%. A 15.4% rally in the fourth quarter made a difference.

The Nasdaq Composite fared the worst of the big three. Its 0.1% decline Friday extended its 2022 losses to 33%. All three indexes locked in their worst year since 2008.

It was also the worst year since 2008 for shares of Apple, Microsoft, Alphabet Class A stock, Nvidia, Costco Wholesale, Cisco Systems, Danaher, NextEra, Adobe, United Parcel Service, Texas Instruments, Salesforce, Starbucks, and S&P Global, among others, according to Dow Jones Market Data. Shares of Alphabet Class C stock, Tesla, Meta Platforms, Broadcom, and Accenture all had their worst year on record. Walt Disney had its worst year since 1974.

The WSJ Dollar Index rose 7 points or 7.8% this year to 96.56. It's the largest annual gain since 2015. The euro lost 5.9% versus the dollar.

Virtual money didn't fare so well: Bitcoin at 5 p.m. ET was down nearly 64% from where it traded 52 weeks ago. Ether was down 68% in that span. Dogecoin was down 60%.

The declines for stocks and other risky assets doesn't mean the S&P 500 has become a bargain bin. I wrote earlier today that the S&P 500 was trading at 16.8 times next year's earnings estimates at the close on Thursday, which is above an average of 16.3 times going back to Dec. 31, 1999.

The data show that stocks have plenty of room to fall if investor sentiment continues to weaken amid the Federal Reserve’s efforts to fight inflation and engineer a “soft landing” for the economy.

In addition, David Rosenberg, the founder of Rosenberg Research, wrote in a research note last week that equity analyst estimates don’t yet reflect the realities of a possible recession, even if one is mild.

“All of this is to say that prudence requires a heavy dose of caution here and an overall defensive posture,” he wrote. “Best to keep exposures tight. Something tells me a test and break of the October lows will be coming our way before long.”

Tom Essaye, the founder of Sevens Report Research, is more optimistic, pointing to a pullback from "nosebleed valuations" a year ago. He writes:

“Now, certainly that number can go lower if a full-fledged and deep recession occurs (it can fall to 15 times or below in extreme cases), but at the same time there’s also legitimate upside if a “soft landing” does occur (up to 18.5 times),” he wrote.

How's that for some year-end optimism? Thanks for reading! We wish you and your families a happy new year. Hopefully 2023 is easier on everyone's portfolios.

Watch our weekly TV show on Fox Business Saturday or Sunday at 10 a.m. or 11:30 a.m. ET. This week, a look at top picks and sectors of the year and what to expect next. Plus, an interview with Capital Group Vice Chairman John Emerson on how China tensions, the Ukraine war and Washington politics will drive markets in 2023.