What are the worst-performing stocks on Wall Street for the year 2023?

Wall Street concluded 2023 with strong gains, as the U.S. stock market experienced a positive year. Despite the initial days of trading being marked by instability and stock price fluctuations, investors turned the page on the year with substantial gains. This comes in contrast to the pessimism that dominated the expectations of Wall Street analysts at the beginning of 2023.

On the last trading day of 2023, major indices on Wall Street closed with significant annual gains. The Nasdaq index rose by 43.4 percent to 15,011 points, the S&P 500 index increased by 24.25 percent to 4,769 points, and the Dow Jones index grew by 13.7 percent to 37,689 points. These gains were supported by declining inflation, the buzz surrounding generative artificial intelligence, and the possibility of interest rate cuts in 2024. Investors are now focusing on the opportunities that 2024 may bring, with expectations of interest rate reductions in the near future.

Economic flexibility supports stocks

The stock indices on Wall Street have significantly benefited from the flexibility of the U.S. economy in the face of rising interest rates. The U.S. Federal Reserve and the U.S. government have successfully managed to slow down inflation rates considerably without a notable increase in unemployment, even as interest rates reached a high of 5.5 percent.

The inflation rate in the United States dropped to 3.1 percent in November 2023, marking a significant decrease from the 9.1 percent recorded in June 2022. The unemployment rate stood at 3.7 percent, considered acceptable according to the U.S. Federal Reserve Chairman. Additionally, the U.S. economy grew at a rate of 4.9 percent in the third quarter of 2023, compared to 2.1 percent in the second quarter of the same year.

Biggest losers on Wall Street

All these strong figures for the U.S. economy pose a challenge to many pessimistic expectations, leading analysts on Wall Street to be largely mistaken about the state of the stock market in 2023. Despite the overall market rise, there are still losers.

Hani AbuAqel, Senior Market Analyst at XTB MENA, told “Economy Sky News Arabia” that Enphase Energy, the American company specializing in solar energy technology, was the worst-performing stock in the S&P 500 index during 2023. It serves as an example of renewable energy companies whose stocks declined for various reasons this year, including disruptions in supply chains. The primary material for solar cells comes from China, and the mutual restrictions between Washington and Beijing have negatively affected production materials from China. This has led to an increase in manufacturing costs and a subsequent decrease in demand. These factors contributed to a 50 percent decline in Enphase Energy’s stock during 2023, as energy prices also dropped, making the company’s products less attractive to many.

According to AbuAqel, FMC Corporation recorded the second-worst performance on the S&P 500 index during 2023. FMC, specializing in the manufacturing of agricultural chemicals, faced a significant challenge with disruptions in its supply chains. Additionally, there was a sharp increase in the raw material costs associated with its products, leading to a substantial decline in its business in key markets. Consequently, its stocks dropped by 49 percent from the beginning of 2023 until the end of the trading year.

As for the third-worst performance on the S&P 500 index in 2023, it was attributed to Dollar General, a retail store chain. The company’s stock declined by 44.8 percent this year. Despite having not experienced an annual decline in its stock since its debut in 2009, Dollar General faced significant challenges in 2023 due to inflationary pressures and a slowdown in consumer spending during certain periods. Ranking fourth and fifth, respectively, were the stocks of Moderna and Pfizer, both recording their worst performance in the healthcare and pharmaceutical sector.

Hani AbuAqel, Senior Market Analyst at XTB MENA, explains in his conversation with “Economy Sky News Arabia” that Moderna’s stock declined by 29 percent during 2022 and continued this trend in 2023, dropping by 44 percent. The company faced a setback for two consecutive years due to a decline in demand for the COVID-19 vaccine it produces. This was coupled with strict regulations imposed on drug development after the COVID-19 era. A similar situation applied to Pfizer, whose stocks fell by 13 percent in 2022 and 43.8 percent in 2023. In 2023, Pfizer also encountered issues related to patent expiration and competition from pharmaceutical companies manufacturing products similar to its own.

Continued bleeding of AMC and Zoom

On the other hand, AbuAqel points out that there are two stocks that performed poorly on the Nasdaq during 2023, continuing their decline post-COVID-19. These stocks are AMC Entertainment Holdings Inc and Zoom Technology. AMC Entertainment, known for its theatrical and film offerings and food distribution services, is considered a “meme” stock. It saw an unprecedented surge in 2021, reaching a percentage increase of 1183. However, it declined by 75 percent in 2022 and 83 percent in 2023. The company struggled to meet shareholder expectations due to significant financial losses, leaving it indebted to nearly $5 billion. This situation forces the company to issue emergency stocks regularly.

As for Zoom Technology, AbuAqel explains that it has dropped by 38.5 percent in 2023, despite the company’s positive business results. The rise in inflation levels and consequently interest rates posed a problem for Zoom’s debt, impacting the company’s stock performance. Zoom had a remarkable period during the COVID-19 pandemic, witnessing a 37 percent increase in its stocks at that time.