What is a bear market? On Wall Street, the benchmark S&P 500 index fell more than 20% from its record high in January

Investors found few, if any, safe havens in 2022 as central banks across the US and around the world hiked interest rates for the first time in years to combat rising inflation and stoked fears of a global recession.

The video above is from a previous report: The stock market falls as the Federal Reserve signals it will remain aggressive to tame inflation

Consumers were paying more for energy, groceries, and just about everything else. Borrowing money to buy a house or car has also become more expensive.

On Wall Street, the Benchmark SThe &P 500 Index went into a bear market, falling more than 20% from its record high set in early January. The energy sector was the only winner while technology stocks tumbled.

A slide in the bond market was a particularly painful turnaround for fixed income investors. Cryptocurrency investors have not been spared either.

-Alex Veiga

Here’s a recap of the key events in the markets for 2022:

INFLATION AND THE FED

Central banks’ response to inflation overshadowed financial markets in 2022 and could do so next year. The Federal Reserve began raising interest rates in March and would eventually raise them seven times by a total of 4.25 percentage points.

Towards the end of the year there were hopeful signs of inflation as commodity prices fell and rents began to fall. But harsh talks from the Fed in December snuffed the fourth-quarter stock rally.

– Chris Rugaber

SEE ALSO: Tips for managing your finances during inflation

THE BEAR ROARS

Wall Street’s brutal year left few stocks unscathed, and the vast majority fell into a bear market under the weight of rapidly rising interest rates.

After peaking on the very first trading day of 2022, it took the S&P 500 down more than 20%. The biggest losers were the stocks that had performed best in the post-coronavirus crash rally. Seven out of ten stocks in the S&P 500 fell in 2022 as of December 21.

– Stan Choe

SEE ALSO: Experts say how low the stock market can fall and what investors should do

BOND MARKET BLUE

It’s been one of the worst years ever for bond investors.

Decades of inflation have meant that the fixed payments on bonds won’t buy as many groceries, gallons of gas or whatever increases in price in the future. The Fed’s decision to raise interest rates also hit bond prices.

Historically, bonds have held up better than stocks during economic downturns and provided investors with some cushion, but both collapsed in 2022.

– Stan Choe

SEE ALSO: Inflation slowed in November, offering relief to consumers

DOWNS ON THE HOUSING MARKET

At the start of 2022, the average interest rate on a 30-year mortgage was just over 3%, near historic lows. By October, the average interest rate on that 30-year home loan had risen to over 7%, a 20-year high.

Higher mortgage interest rates coupled with continued rise in home prices are making it difficult for many prospective buyers to own a home. Sales of previously occupied US homes saw the biggest drop in sales in more than a decade.

-Alex Veiga

SEE ALSO: Rising inflation may mean lower tax bills for some as the IRS raises the brackets

IS TESLA ON AUTOPILOT?

You can’t blame Tesla shareholders for feeling let down. With CEO Elon Musk’s focus diverted by the Twitter acquisition, Tesla shares lost more than half of their value.

Most of Musk’s wealth is tied up in Tesla stock, which began falling in April when he announced a stake in Twitter. The falling stock price put Musk second on Forbes’ list of the world’s richest people, behind Bernard Arnault, chairman of luxury goods maker LVMH.

-Tom Krisher

SEE ALSO: Elon Musk takes control of Twitter, fires CEO and CFO, sources say

CONSUMERS FEEL THE KNEISE

The highest inflation in four decades is hitting consumers directly in their wallets.

Households grappling with higher prices are likely using up savings they built up during the pandemic. Wages rose, although not at the same pace as inflation. Credit card debt skyrocketed and rents rose.

Aggressive Fed rate hikes have pushed up the cost of borrowing. But while the average interest rate on a credit card rose to 16.3% in August, the average interest rate on a savings account is still just 0.2%, according to the government.

– Cora Lewis

SEE ALSO: How millions of missing workers are getting by without a job

EFFECTS OF THE UKRAINE WAR

Russia’s invasion of Ukraine in February sent prices skyrocketing for the commodities the world lives on: oil, natural gas and wheat.

European natural gas prices rose to 17 times their pre-war levels after Russia halted most wartime supplies. Global oil prices soared as Western buyers avoided Moscow’s crude, pushing Brent above $120 a barrel in May. Record wheat prices fueled catastrophic food inflation in poor countries.

By the end of the year, the price of oil had fallen back to around $80. US drivers saw much-needed relief from high gasoline prices.

SEE ALSO: Zelenskyy to Congress: US aid is vital in defense against Russian invasion

CHINA GIVES ZERO COVID

China’s economic growth and stock market slipped in 2022 under pressure from pandemic controls and corporate debt.

The world’s second-largest economy shrank 2.6% quarter-on-quarter in the three months to June after Shanghai and other industrial hubs shut down to combat outbreaks. Forecasts say annual growth could fall below 3%, one of the lowest in decades.

In response, the ruling Communist Party has eased anti-disease restrictions and sought to revitalize the ailing real estate industry.

– Jo McDonald

SEE ALSO: ‘There is limited immunity’: China’s COVID-19 surge raises likelihood of new mutant coronavirus

KRYPTOS WILD RIDE

The year started with Bitcoin above $45,000 and the crypto industry continuing to make inroads among politicians and mainstream financial institutions. At the end of 2022, Bitcoin is below $17,000 and the industry is suffering another crisis.

FTX, the second largest crypto exchange, dissolved in November after questions about its financial strength prompted customers to request large withdrawals. It filed for bankruptcy protection on November 11. Founder Sam Bankman-Fried was arrested in the Bahamas and faces criminal prosecution in the United States

– Ken Sweet

SEE ALSO: Former Texas electronics giant RadioShack is relaunching as a cryptocurrency company

THE STREAMING WARS

Netflix, Warner Bros. Discovery, and other big entertainment companies slumped in 2022 as streaming services dampened ad spending amid increased competition and rising inflation.

Consumers locked down during the pandemic went out and shut down their streaming services. The sheer number of streaming options also meant that companies were fighting fiercely for viewers’ attention.

– Damian Troise

SEE ALSO: Hulu Offers College Students a $1.99/month Pre-Back-to-School Subscription: How to Sign Up

Copyright © 2022 by The Associated Press. All rights reserved.

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Laura Coffey

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