Stocks are closing out 2022 with more losses, giving the S&P 500 its worst year since 2008. The benchmark index fell 0.3 percent Friday, the last trading day of the year, leaving it down 19.4 percent for the year. The technology-heavy Nasdaq and the Dow also fell and ended the year in the red. 

The Fed’s battle against inflation will likely remain investors’ overarching concern in 2023, according to analysts. When Wall Street reopens after another long holiday weekend, investors will have several big updates on the employment market to digest in the first week of the new year.

There was scant corporate or economic news for Wall Street to review on the last trading day of the year. Tesla rose 0.4 percent, as it continued to stabilize after steep losses earlier in the week. The electric vehicle maker is still on pace for a 65 percent loss this year.

Southwest Airlines rose 0.3 percent as its operations returned to relative normalcy following massive cancellations over the holiday period. The stock is still down 7.2 percent for the week.

Energy stocks held up better than the rest of the market as U.S. crude oil prices settled 2.4 percent higher.

Bond yields mostly rose. The yield on the 10-Year Treasury, which influences mortgage rates, rose to 3.88 percent from 3.82 percent.

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 percent to 0.25 percent at the beginning of 2022 and will close the year at a range of 4.25 percent to 4.5 percent after seven increases. The central bank forecasts that the rate will reach a range of 5 percent to 5.25 percent by the end of 2023. Its forecast doesn’t call for a rate cut before 2024.

Russia’s invasion of Ukraine worsened inflation pressure earlier in the year by making oil, gas and food commodity prices even more volatile amid existing supply chain issues. China spent most of the year imposing strict Covid policies which crimped production for raw materials and goods, but is now in the process of removing travel and other restrictions.

The Fed’s battle against inflation, though, will likely remain the overarching concern 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.

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 a November report on job openings on Wednesday. That will be followed by a weekly update on unemployment on Thursday. The closely-watched monthly employment report will be released on 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 increased their profit margins.

Companies in the S&P 500 are expected to broadly report a 3.5 percent drop in earnings during the fourth quarter, according to FactSet. Analysts expect earnings to then remain roughly flat through the first half of 2023.