By Yasin Ebrahim
Investing.com -- The Dow closed lower Friday, wrapping up the year with its biggest annual losses since the 2008 financial crisis as the Federal Reserve's fastest pace of rate hikes in four decades squeezed life out of bullish bets.
The Dow Jones Industrial Average fell 0.2% or 73 points, taking losses for the year to about 9%. The Nasdaq Composite was down 0.1% and the S&P 500 fell 0.3%. All three indexes suffered their worst since 2008.
Stocks started the final day of trade on the backfoot as tech closed mixed with Apple (NASDAQ:AAPL) and Meta Platforms (NASDAQ:META) ending the day higher. But Alphabet (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) closed in the red.
Semiconductor stocks continued to slide as investors fret about falling demand for chips amid a softer global economic backdrop.
"We believe investor's concern for some time with semiconductors has been that enterprise demand will follow consumer requirements in softening," Wedbush said. "DigiTimes suggests indeed this future is coming to fruition with hyperscale and telcos cutting back data center expansion plans."
Taiwan Semiconductor Manufacturing (NYSE:TSM) ended 2% lower, while Novanta (NASDAQ:NOVT) and Micron Technology (NASDAQ:MU) were down more than 1%, with latter also weighed down by downgrade from Argus.
Argus downgraded Micron to 'hold' from 'buy', citing the potential for wider losses in upcoming quarters.
The 29% loss in tech for the year has the Federal Reserve's fingerprints all over it. The U.S. central bank embarked on the fastest pace of rate hikes seen in four decades, pushing Treasury yields higher, and hurting valuations of pricier sectors of the market including tech.
Electric vehicle makers were also in the spotlight as Nikola Corporation (NASDAQ:NKLA) fell nearly 10% on plans to raise funds by selling $125 million of senior convertible bonds. China-based EV maker Li Auto (NASDAQ:LI) rose nearly 5% as it forecast more than 20,000 deliveries this month, up from the 14,087 delivered in December of 2021.
Energy was the only sector in the green, ending nearly 1% higher, as oil prices settled higher to end the year with gains of about 7%.
In deal news, Rogers Communications (NYSE:RCI) received the green light to proceed with its $26B acquisition of rival telecom company Shaw Communications (TSX:SJRb) after Canada's antitrust tribunal approved the deal.
Following the major slump this year, debate has broken out on Wall Street whether the upcoming quarterly earnings season will signal more trouble for stocks even if the Fed does get a firmer grip on inflation.
"If the Fed does manage to keep inflation in check, but then companies are reporting how much this persistently high inflation is impacting their ability to grow earnings, the market is going to take that as quite a downtick," chief market strategist David Keller at StockCharts told Investing.com's Yasin Ebrahim in an interview earlier this month.
Wall Street banks are set to kick off the fourth quarter earnings season in earnest during the second full week of January.