| Index | Fourth Quarter 2022 | Year To-Date 2022 |
| S&P 500 | 7.1% | -19.5% |
| Dow Jones Industrial Average | 15.3% | -8.8% |
| Russell 2000 | 5.8% | -21.6% |
| MSCI EAFE (International Index) | 17.7% | -14.4% |
| Barclays Aggregate Bond | 1.6% | -13.0% |
Performance Source: Koyfin
U.S. Versus International
The S&P 500, an index of large U.S. companies, posted a total return of 7.1% for the Fourth Quarter of 2022. U.S. stocks lagged international for the quarter as measured by the iShares MSCI EAFE ETF, a representation of international stocks outside the U.S. EAFE total return for the Fourth Quarter of 2022 was 17.7%.
The U.S. Dollar weakened throughout the quarter as indicators show that the pace of interest rate increases by the U.S. Federal Open Market Committee may slow. On the flip side, the European Central Bank is looking at further tightening and balance of rising rates while being cognizant of growth. When the dollar declines, assets priced in foreign currencies, such as international stocks, rise in value.
For the full year, U.S. stocks marginally outperformed international. The S&P 500 Index reported total return of -19.5% for 2022 while the international MSCI EAFE ETF had a total return of -21.6%. The best performing countries of 2022 included Turkey, Chile, Brazil and Argentina–all countries that benefit from a positive environment for commodity prices. Commodities performed very well in 2022 due to high inflation.
U.S. Sectors
Top performing U.S. S&P 500 sectors as reported by Koyfin for the Fourth Quarter of 2022 by total return include Energy (22.7%), Industrials (19.1%) and Materials (15.0%). Laggards for the Fourth Quarter include Consumer Discretionary (-9.1%), Communications (0.5%) and Real Estate (3.7%).
Top performing S&P 500 sectors as reported by Koyfin for the full year 2022 include Energy (64.3%), Utilities (1.4%) and Consumer Staples (-0.8%). Laggards for 2022 include Communications (-37.6%), Consumer Discretionary (-36.3%) and Technology (-27.7%).
Fourth quarter performance favored more stable sectors such as Energy and Industrials that may not be as impacted by a recession in 2023. Inflation fears started to decline as the year over year pace slowed. However, inflationary fears are being replaced with threats of recession. As earnings reports roll in for the fourth quarter we’ll have better clarity regarding the possibility of a recession and how much is already priced into current stock prices.