LIFE & WORK
S&P 500 closes out dismal year with worst loss since 2008
Wall Street capped a quiet day of trading with more losses Friday, as it closed the book on the worst year for the S&P 500 since 2008.
The benchmark index finished with a loss of 19.4% for 2022 — just its third annual decline since the financial crisis 14 years ago and a painful reversal for investors after the S&P 500 notched a gain of nearly 27% in 2021. The Nasdaq composite, with a heavy component of technology stocks, racked up an even bigger loss of 33.1%.
The Dow Jones Industrial Average, meanwhile, posted an 8.8% loss for 2022.
Stocks struggled all year as inflation put increasing pressure on consumers and raised concerns about economies slipping into recession. Central banks raised interest rates to fight high prices. The Federal Reserve’s aggressive rate hikes remain a major focus for investors as the central bank walks a thin line between raising rates enough to cool inflation, but not so much that they stall the U.S. economy into a recession.
The Fed’s key lending rate stood at a range of 0% to 0.25% at the beginning of 2022 and will close the year at a range of 4.25% to 4.5% after seven increases. The U.S. central bank forecasts that will reach a range of 5% to 5.25% by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.
Rising interest rates prompted investors to sell the high-priced shares of technology giants such as Apple and Microsoft as well as other companies that flourished as the economy recovered from the pandemic. Amazon and Netflix lost roughly 50% of their market value. Tesla and Meta Platforms, the parent company of Facebook, each dropped more than 60%, their biggest-ever annual declines.
Russia’s invasion of Ukraine worsened inflationary pressure earlier in the year by making oil, gas and food commodity prices even more volatile amid existing supply chain issues. Oil closed Friday around $80, about $5 higher than where it started the year. But in between oil jumped above $120, helping energy stocks post the only gain among the 11 sectors in the S&P 500, up 59%.
China spent most of the year imposing strict COVID-19 policies which crimped production for raw materials and goods, but is now in the process of removing travel and other restrictions. It’s uncertain at this point what impact China’s reopening will have on the global economy.
The Fed’s battle against inflation, though, will likely remain the overarching concern on Wall Street in 2023, according to analysts. Investors will continue searching for a better sense of whether inflation is easing fast enough to take pressure off of consumers and the Fed.
If inflation continues to show signs of easing, and the Fed reins in its rate-hiking campaign, that could pave the way for a rebound for stocks in 2023, said Jay Hatfield, CEO of Infrastructure Capital Advisors.
“The Fed has been the overhang on this market, really since November of last year, so if the Fed pauses and we don’t have a major recession we think that sets us up for a rally,” he said.
There was scant corporate or economic news for Wall Street to review Friday. That, plus the holiday shortened week, set the stage for mostly light trading.
The S&P 500 fell 9.78 points, or 0.3%, to finish at 3,839.50. The index posted a 5.9% loss for the month of December.
The Dow dropped 73.55 points, or 0.2%, to close at 33,147.25. The Nasdaq slipped 11.61 points, or 0.1%, to 10,466.48.
Tesla rose 1.1%, as it continued to stabilize after steep losses earlier in the week. The electric vehicle maker’s stock plummeted 65% in 2022, erasing about $700 billion of market value.
Southwest Airlines rose 0.9% as its operations returned to relative normalcy following massive cancellations over the holiday period. The stock still ended down 6.7% for the week.
Small company stocks also fell Friday. The Russell 2000 shed 5 points, or 0.3%, to close at 1,761.25.
Bond yields mostly rose. The yield on the 10-Year Treasury, which influences mortgage rates, rose to 3.88% from 3.82% late Thursday. Although bonds typically fair well when stocks slump, 2022 turned out to be one of the worst years for the bond market in history, thanks to the Fed’s rapid rate increases and inflation.
Several big updates on the employment market are on tap for the first week of 2023. It has been a particularly strong area of the economy and has helped create a bulwark against a recession. That has made the Fed’s job more difficult, though, because strong employment and wages mean it may have to remain aggressive to keep fighting inflation. That, in turn, raises the risk of slowing the economy too much and bringing on a recession.
The Fed will release minutes from its latest policy meeting on Wednesday, potentially giving investors more insight into its next moves.
The government will also release its November report on job openings Wednesday. That will be followed by a weekly update on unemployment on Thursday. The closely-watched monthly employment report is due Friday.
Wall Street is also waiting on the latest round of corporate earnings reports, which will start flowing in around the middle of January. Companies have been warning investors that inflation will likely crimp their profits and revenue in 2023. That’s after spending most of 2022 raising prices on everything from food to clothing in an effort to offset inflation, though many companies went further and actually padded their profit margins.
Companies in the S&P 500 are expected to broadly report a 3.5% drop in earnings during the fourth quarter, according to FactSet. Analysts expect earnings to then remain roughly flat through the first half of 2023.
U.S. stock markets will be closed Monday in observance of the New Year’s Day holiday.
LIFE & WORK
Mississippi River crest reaches historic proportions as Iowans cope with yet another flood
As a slow-moving crest works its way down the Mississippi River this week, flood-weary Iowans living along the water were doing their best to cope with the rising water.
In Davenport on Sunday, River Drive lived up to its name: The street looked like a river, but residents said their sandbagging efforts are working.
James Perez, who was helping a local business owner fill sandbags Thursday night outside Mary’s Bar in downtown Davenport, estimated about 180,000 pounds of sand encircled the business they were trying to protect.
About a block away, the barrier outside the bar kept water from entering the business, which remained open Sunday evening.
Perez recalled the 2019 flood, when the Mississippi River broke through a temporary barrier, covering streets and surrounding homes and businesses.
“This time around, we knew ahead of time what to do so I kind of took charge,” Perez said. “I took all the volunteers who were not sure what to do and organized them into a team.”
Some are making the best of a bad situation. With music playing on a portable speaker, Joseph Anderson and Jimi Williams spent a recent afternoon in their kayaks floating down River Drive.
Anderson, a longtime resident of Davenport, said people who call the place home know what to expect.
“Checking out the view and enjoying life. Watching it under water and getting a different perspective of the same thing,” Anderson told . “It’s a beautiful day. We get to see the city. Not everyone gets this view. This is a locals-only tour.”
The flooding caused by snow melt this year does not compare to the 2019 flood, Anderson said.
“You start to get used to it. This one isn’t as bad. Last time we had some levies break and there was a little more damage. It’s not too bad,” Anderson told CNN. “Everyone was prepared. They’ve been through this before, and if you are local you know what to expect.”
Claudia Anderson, the manager of The Phoenix, a large downtown Davenport restaurant, said Monday the barriers seemed to be holding water out of the business, and sump pumps are taking out the little water that does get it.
But the restaurant cannot open, and it’s losing tens of thousands of dollars in revenue, she said. She has had to temporarily lay off about two dozen employees, including some who have no other income.
“It is what it is, we’ve gone through this, I can’t tell you how many times we’ve gone through the flood,” Anderson said.
The crest in the Quad Cities area in Iowa ranked in the top 10 historic crests Monday, according to the National Weather Service.
The river gauge at Rock Island, near Davenport, was cresting with water levels fairly steady around 21.4 feet Monday morning, placing it as the eighth-highest recorded at that spot.
Flood warnings continue along a long stretch of the Mississippi River from St Paul, Minnesota, to just north of St Louis, Missouri, as snow melts from a phenomenal winter season.
The recent flooding comes after areas of the Upper Midwest saw extraordinary snowfall this winter. Duluth, Minnesota, broke its highest seasonal snowfall last month, and Minneapolis recorded its third-highest season.
As the snow in the region melts, the swell of water is making its way south.
Upstream from Davenport in Dubuque, Iowa, officials closed all of its floodgates along the river last week, only the third time the gates have been closed since they were installed in 1973. Pumping stations were operating around the clock.
And farther upstream, North Buena Vista area residents were living in flooded homes, CNN affiliate KCRG reported Sunday, taking “canoes back and forth or we wade through the water,” resident Scott Blum told the station.
The Mississippi will continue cresting further south on Tuesday and Wednesday, but major flooding is not forecast for locations farther south.
A levee breach causes more flood damage
Sixty miles north of Davenport, in Green Island, Iowa, a levee breach flooded roughly 4,000 acres of a wildlife refuge and damaged nine properties, according to Jackson County Emergency Management Director Lyn Medinger.
Officials were not yet able to investigate the cause of the breach due to weather, Medinger told CNN Monday, adding authorities will likely reach the area Tuesday morning.
The region has seen powerful winds, making air transport to the area difficult
No injuries were reported and no evacuations have been made, Medinger said.
“The one breach is affecting the low-lying areas in that region,” the director added.
Just a few miles south, in the city of Sabula, the flood wall was eroded by the high winds but officials were able to stabilize the situation with sandbags and avoid flooding, Medinger said.
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International Journalism Festival 2023: the events you shouldn’t miss in Perugia
Here is a curated list of panels on topics such as Ukrainian media, membership and funding models, solutions journalism and more.
April journalists from all over the world will be gathering for the International Journalism Festival in Perugia once again. Many voices from the Reuters Institute will speak at the festival. Here’s a selection of some of the highlights this year, which include panels on reader revenue models, the media in Ukraine, press freedom, equity and inclusion in journalism and AI. All the panels will be live-streamed on the festival’s IJF YouTube channel. See you in Perugia or online.
Investigating the crimes of war
Anna Babinets from Slidstvo.Info | Sam Dubberley from HRW | Sarah El Deeb from AP | Anne Koch from GIJN
12.00. Sala delle Colonne, Palazzo Graziani.
How to support the Ukrainian media system in the long run
Joanna Krawczyk from the German Marshall Fund of the United States | Jakub Parusinski from The Fix | David Schraven from CORRECTIV | Penelope Winterhager from the JX Fund | Eugene Zaslavsky from the Media Development Foundation
14.00. Sala della Vaccara, Palazzo dei Priori.
Membership models: all you need to know about running a member-centric newsroom
Leon Fryszer from Krautreporter | Richard Hoechner from Republik | Lea Korsgaard from Zetland | Eduardo Suárez from RISJ
14.00. Sala dei Notari, Palazzo dei Priori.
Gender, leadership and surviving authoritarian regimes and cultures: women leading independent Arab media speak up
Rawan Damen from ARIJ | Fatemah Farag from Welad Elbalad Media | Diana Moukalled from Daraj | Nora Younis from AlManassa News
15.00. Sala della Vaccara, Palazzo dei Priori.
Solutions journalism: a means to achieve equity and inclusion
Dina Aboughazala from Egab | Caleb Okereke from Minority Africa | Dora Santos Silva from Obi.Media | Holly Wise from the Solutions Journalism Network
16.00. Sala Brugnoli, Palazzo Cesaroni.
Two to tango: a closer look at the relationship between independent investigative teams and legacy media
Cecilia Anesi from IRPI | Nikolas Leontopoulos from Reporters United | Geoffrey Livolsi from Disclose | Elisa Simantke from Investigate Europe | Bastian Obermayer
16.00. Auditorium San Francesco al Prato.
How the far right is going global
Luke O’Brien from the Shorenstein Center | Andrea Dip from Agência Pública | Natalia Viana from Agência Pública | Jamil Chade
17.00. Sala dei Notari, Palazzo dei Priori.
Legal threats hampering media freedom
Lina Attalah from Mada Masr | Will Church from TRF | Chile Eboe-Osuji from Toronto Metropolitan University | Jodie Ginsberg from CPJ | Joel Simon from the Journalism Protection Initiative | Antonio Zappulla from TRF
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