Wall Street ended 2022 mired in the biggest drop in 14 years

2022 gave rise to a great bear market in which investments in growth businesses were the big disappointment: the technology sector fell 30%, and larger capitalization companies such as Apple and Amazon, among others, generated a general drag of the economy and of the shares in the New York Stock Exchange. Two other sectors that showed significant losses were the Communications and Cyclical Consumption, which fell 40% and 37%, respectively, throughout these 12 months; in the first, the falls of Meta Platforms and Alphabet Inc, while, in the second, Tesla and Amazon.

In this context, Ambit experts were contacted who described the photo of the main results of the global financial markets this year and told us what their Outlook on Wall Street for 2023.

Cedears: What is the balance of Wall Street during 2022?

Since SBS, Juan Manuel Franco, Chief Economist, He maintained that the rises of Interest rates hit the tech industry, with record falls of close to 35% on the Nasdaq.

And he remarked that the rise in global inflation was exacerbated by the war between Russia and Ukraine that shot up the prices of commodities. So he realized that energy firms like Exxon, which rose 77% on the year, were highly favored.

While, Brian Alejandro Arce, Analyst at Liebre Capital, stressed that the bitter taste left by the equity was terrible, so much so that of the 11 sectors that make up the S&P500 Index, only two did not fall (energy and utilities).

In addition, he stated that the cost of capital a year ago it was around 0.25%while today it reaches 4.5%, fiercely damaging the business of companies intensive in new investment flows.

For his part, María Baccini, Investment Ideas Analyst at Balanz considered that the painting Wall Street was brushed with optimism in the energy sector due to the record rise in oil.

In counterpart, He mentioned that another sector hit was the communication which is mainly focused on innovation and continuous development of new products.

Cedears: What does Wall Street predict for 2023?

From SBS, they believe that in 2023 inflation in the developed world will continue to prompt the world’s main central banks not to prematurely abandon their contractionary stance until I see concrete evidence of disinflation.

Although they mentioned that another part of the eyes will be on the performance of the economic activity. In this way, stressed that special attention will have to be paid to the performance of China, which recently cut with its “zero Covid” policy, which implies relaxing restrictions, which could work as a support for global demand but also for commodities in general, putting pressure on world inflation. “If this materializes, sectors related to commodities could be favored”they maintained.

Since Capital Hare, they stated that the signs are not yet encouraging enough to excite investors who are invaded by the fear of a recession in the next year.

“The outlook for defensive stocks looks even better, due to the persistent increase in interest rates that make credit more expensive and the rise in the price of commodities. Basic Consumption companies and pharmaceuticals become the best positions for 2023”Arce concluded.

Lastly, from Balance, regarding its strategic positioning for 2023, suggested choose companies type Valuewhich have strong cash flows, less susceptible to rate movements. In addition, they have pricing capacity and usually pay high dividends given its stable businesses, where unlike the growth (Growth) its business strategy is the leverage for the growth of the company. Between such segments, highlighted HealthCare or Industrial, Baccini finished.