By The year 2023 has seen a remarkable performance from the S&P 500, with a 14% increase. However, it’s interesting to note that if we exclude the gains from the eight best sessions so far, the index would actually be trading in the red.
Nicholas Colas, co-founder of DataTrek Research, has analyzed these eight winning sessions to understand the key factors that have influenced the U.S. markets this year. In his written commentary shared with clients, Colas highlights the positive impact of news related to short/long term interest rates, Big Tech earnings, and averting a looming recession.
These factors continue to remain relevant and are expected to be the driving forces behind further rally in U.S. equities. This analysis serves as a reminder of the risks associated with market timing, a practice commonly observed on Wall Street.
The data reveals that investors in 2023 have had very little margin for error. The number of days with gains is only 11 more than the number of days with losses (113 up days compared to 102 down days, according to Colas).
Colas reinforces the adage that the stock market tends to take the stairs up but the escalator down. Although climbing the stairs may seem tiring and time-consuming, it is the steady and consistent approach that leads to success.
To provide a clearer picture, below is a list of the eight crucial days that contributed to gains in 2023, along with Colas’ insights on what drove the market higher.
Best Stock Market Gains in 2023
Jan. 6 (+2.3% gain):
The year 2023 got off to a great start with the best day yet, driven by a slower than expected wage inflation and a contraction in activity in the services sector.
April 27 (+2%):
META/Facebook shares soared 14 percent after reporting better than expected earnings, following the strong Q1 financial reports of other Big Tech companies.
Jan. 20 (+1.9%):
Nov. 2 (+1.9%):
The fourth best day of the year occurred recently, as the FOMC chose to skip rate hikes and Chair Powell expressed satisfaction with current monetary policy. This led to a decline in the 10-year Treasury yields.
May 5 (+1.8%):
Apple’s impressive revenues and earnings uplifted its stock by 4.7 percent and reinforced investor confidence in the ongoing Big Tech rally. Additionally, JPMorgan’s upgrade of select U.S. regional bank stocks provided support amidst challenges faced by this group following Silicon Valley Bank’s failure in March.
March 16 (+1.8%) and March 14 (+1.6%):
After a sharp decline in the S&P 500, regulators’ deposit guarantees at SVB and Signature Bank on the 14th, along with large banks placing deposits at First Republic on the 16th, helped the index rebound. Concerns over the U.S. banking system’s uncertainties and their impact on credit availability and a possible recession were alleviated.
March 3 (+1.6%):
Stocks experienced a rally as 10-year Treasury yields failed to sustain the 4% level.
U.S. Stocks Struggle to Extend Winning Streaks
U.S. stocks experienced a dip in midday trade on Wednesday, halting the S&P 500 SPX and Nasdaq Composite COMP from extending their longest winning streaks in two years. The Dow Jones Industrial Average DJIA also followed suit, declining by 50 points, or 0.2%, settling at 34,099.
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