First Day Of Trading For 2023  Image: Shutterstock Stocks closed lower on Friday, and mostly lower for the week (except for the small-cap Russell 2000, which eked out a small weekly gain). All of the indexes were also down for the month of December, no exceptions. This was an atypical monthly performance as stocks are usually higher in December. Q4, however, was mostly higher, with the exception of the Nasdaq. The higher quarterly performance (for most of the indexes), was a welcomed change given the three down quarters that preceded it. But the year still ended lower with the Dow down -8.78%, the S&P down by -19.4%, the Nasdaq down by -33.1%, and the Russell 2000 down by -21.6%. For the S&P, it was the first down year since 2018, and the worst down year since 2008, when it closed lower by -38.5%. (For those wondering, 2009 was up 23.5%. So let's hope we see something similar this year.) 2022 began with worries over inflation, interest rates, and what these would do to the economy. We head into 2023 much the same way, as those 3 things will ultimately decide what happens in the new year. But, unlike the beginning of 2022, which saw inflation on the rise, while the Fed embarked on one of the fastest rate hikes in history; the beginning of 2023 sees inflation on the decline, with the pace of interest rate hikes slowing, and an end target in sight. Moreover, we saw a recession in the first part of 2022, but we exited that in the back half, with Q3 GDP up 3.2% (it's no longer a recession when the economy starts growing again), and Q4 expected to come in at 3.7% (according to the Federal Reserve Bank of Atlanta's GDP Now forecast). We will get another look at inflation this month before the Fed's next FOMC announcement on rates on February 1. But for now, the recent downward trajectory on inflation is good news. Also at our back in 2023, is the favorable seasonal tendency of the 4-year Presidential Cycle, which shows that year 3 (that's 2023), is the best year of all 4 years. In fact, since 1950, stocks have always gone up in the year after midterms, with an average 12-month forward return of 18.6%. If that statistic holds up, 2023 could look markedly different than 2022. You can also help make the new year a profitable one by checking out our Top 10 Stocks portfolio. Since 2012, the Top 10 portfolios have TRIPLED the market. While the S&P 500 gained +287.4%, Zacks Top 10 Stocks skyrocketed +884.5%. This year's Top 10 picks will be released this morning (Tuesday, January 3), at 11:00 AM ET. If 2023 is anything like previous years, get ready to watch the Top 10 Stocks soar. Click here to see the Top 10 Stocks for 2023. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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