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In 2023 the US equity indexes have made solid gains as mega-cap Tech stocks record gains


Due to the 4th of July holiday, Monday was a shortened trading session. On lower-than-normal volume, the U.S. equity indexes posted modest gains. The S&P 500 Index SPY closed +0.12 percent higher on Monday and the Nasdaq 100 Index (QQQ) closed +0.19 percent higher. The Nasdaq 100 hit a two-week high Monday on the strength of technology stocks. This was on the back of Tesla rising 6.9% on the day. Tesla reported record quarterly sales. Another sector pushing Monday’s gains were regional bank stocks.
Looking at the economic data, the June ISM manufacturing index in the U.S. declined -0.9 to 46.0. This was not expected by market economists as they missed their expectations of an increase to 47.1. This was the worst loss in more than three years. While in May, U.S. spending on construction increased by +0.9 month on month, exceeding expectations of +0.6%.
Market economists are pricing in more than an 80% possibility of a +25 bp rate hike. This for the upcoming FOMC meeting on July 25-26. The collective expectations are now for a Fed Funds peak around 5.45% by year end. Thus 37 basis points higher than the current effective federal funds rate of 5.08%.

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stock indexes

NASDAQ equity indexes

So far, in 2023 the technology sector has carried the equity indexes. The Nasdaq 100 and the Nasdaq Composite have gone from strength to strength. Year to date the QQQ is up over 39%. While the S&P 500 was up over 16% year to date and up over 31% from the October 2022 lows. While the Bears are still calling for a recession. But the solid returns from the October lows satisfy one conventional definition of a new bull market

Bull Market and stock indexes

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But what is next?

Investors are keen to see the solid returns of U.S. stocks continue. They are also feeling some frustration at market experts who have been way behind the market. Some are still calling for a recession, stating they have a conservative view. The market returns in 2022 were disappointing and at that point were priced in for a recession. At this point the market is pricing in returns for the end of 2024. The market always does this. Remember this “Equities lead earnings and earnings lead the economy”.

It is worth noting, be advised against premature exuberance, expecting the same performance in the second half of 2023. It is highly unlikely that mega-cap stocks will record the same performance. But this should not cast doubt on the current rally’s sustainability albeit at a slower pace. There is the threat of a recession is still hovering over the US economy and the Fed fights inflation. This year’s advances have been driven by a small number of very large corporations, known as the Magnificent Seven. Without these stocks, the first half return for the S&P 500 would be around 2% and around 14% for broader tech.

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a broader participation

For the rally to continue there must be a broader participation in other sectors. Sectors to keep an eye on include banks, mainly the major banks, GS, MS, JPM and BAC. A mixture of a retail focus and capital markets. Also, broad industrial stocks and material socks could post gains. Utilities will likely continue to be laggards and too early for pharma stocks.

The Euro Stoxx 50 fell -0.02%, the Shanghai Composite Index in China finished up 1.31%. The Nikkei Stock Average in Japan closed up 1.70%.

The charts used in this Blog Post are from Barchart. Barchart is a financial data and technology company that provides financial market data, news, analysis, and trading solutions. 


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In 2023 the US equity indexes have made solid gains as mega-cap Tech stocks record gains

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Warren William

Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: or Telegram +393339034488

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