P 500 briefly dipped to session lows in thin trading, taking the shine off Thursday’s best-of-December rally and leaving it down almost 20 per cent in 2022.
Losses this week scuppered hopes for a rally to close out 2022 — a year when inflation reasserted itself to wipe a fifth in value from global stocks, the worst run since the financial crisis. Bonds lost 16 per cent of value, the biggest decline since at least 1990 for one leading measure, as central banks raced to slow rising consumer prices by hiking interest rates around the world.
“While stocks will struggle with slowing economic activity and the loss of inflated earnings from inflation, bonds are earning a decent income with the potential for price appreciation as yields come off their peak,” said Bryce Doty, senior portfolio manager for Sit Investment Associates. “The Fed is nearly done raising rates – we expect no raise at the Fed’s May meeting - and inflation is slowing.
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