Stock Market Today: Stocks Close the Door on a Tumultuous 2022

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Stocks finished the year far from where they started it. After hitting record highs in January, stocks exited December with a whimper, serving up their worst annual performance since the Great Financial Crisis year of 2008.

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Markets are closed on Monday in observance of New Year's Day, and so volume was naturally razor-thin ahead of the long holiday weekend. As for those market participants who did stick around, plenty of them were willing to sell at lower and lower prices, perhaps partaking in some last-minute tax-loss harvesting.

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The broad S&P 500 Index suffered the biggest decline of the main benchmarks today, shedding 0.3% to 3,839. The blue-chip Dow Jones Industrial Average gave back 0.2% to 33,147, while the tech-heavy Nasdaq Composite lost 0.1% to 10,466. For all of 2022, the Nasdaq finished down 33.1% on a price basis, the S&P 500 was off 19.4%, and the Dow shed 8.8% before dividends.

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But stocks were by no means alone in having a miserable 2022. The bond market closed out the year with historic losses and cryptocurrencies crumbled. Bitcoin, for example, shed about two-thirds of its value in 2022. And although oil prices finished the year modestly higher, U.S. crude futures are still down roughly 35% from their June highs of more than $122 per barrel. On Friday, they settled at $80.26 a barrel.

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It's fair to say that investors had too much to contend with this year, including a Fed intent on whipping inflation with aggressive interest rate hikes and a slowing economy on the cusp of recession. These same concerns will continue to shape markets in the early going of 2023, with all the attendant headaches investors have come to know too well.

So what does this mean for investors in search of the best stocks to buy?

"A popular piece of advice among Wall Street strategists now is to resist the bargain-basement appeal of the most beaten-up stocks and focus instead on high-quality shares," writes Anne Kates Smith, executive editor of Kiplinger's Personal Finance.

High-quality value-oriented firms, like those found in the energy, financials and industrial sectors – and, yes, even some select small-cap stocks – stand out for their return potential in the new year. After all, 2022 has left us no shortage of market laggards set to generate outsized returns over the next 12 months.

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.