U.S. stocks concluded the first half of the year on a positive note, as they rallied on Friday, 30th June 2023.
The market drew strength from lower-than-expected PCE data for May, which showed slight decreases on a month-on-month and year-on-year basis. Once again, the tech sector led the rally with Apple hitting a USD 3 trillion market capitalization.
Throughout the week, month, quarter, and first half of the year, the S&P 500, Nasdaq Composite, and Dow Jones indexes all achieved gains. For the week, the three benchmarks all gained about 2%.
In June, the S&P and Nasdaq both saw increases of around 6.5%, while the Dow’s 4.6% gain marked its strongest performance since November. During the second quarter, the S&P jumped 8.3%, its best quarter since Q4 2021, while the Nasdaq surged nearly 13% and the Dow gained 3.4%.
Looking at the first six months of 2023, the Nasdaq exhibited an impressive surge of 31.7%, its strongest first half since 1983. Similarly, the S&P soared 15.9%, its best first half since 2019, while the Dow achieved a more modest gain of 3.8%.
Here are the closing levels on Friday, 30th June 2023:
| Last | Change | %Change | |
| Dow Jones | 34,407.60 | +285.18. | +0.84% |
| S&P 500 | 4,450.38 | +53.94. | +1.23% |
| Nasdaq Comp. | 13,787.92 | +196.59. | +1.45% |
| U.S. 10Y | 3.84% | ||
| VIX | 13.59 | +0.05 | +0.37% |
A report on Friday showed stagnant consumer spending and cooling inflation, earlier data on everything from gross domestic product to new home sales and durable goods orders beat forecasts.
Although a report on Friday indicated stagnant consumer spending and cooling inflation, earlier data, such as gross domestic product, new home sales , and durable goods orders, surpassed expectations, reinforcing the belief that the economy will avoid a recession.
Investors appear undeterred by the possibility of higher interest rates from the Federal Reserve and other central banks, as long as the economy continues to thrive and companies generate profits.
The low unemployment rate influences the current spending trends, as individuals tend to spend more when job security is high. The upcoming unemployment data on Friday will either confirm or challenge this concept. It is likely that the market will continue to rise due to FOMO (fear of missing out) or the perception that there are no viable alternatives (TINA), as well as the path of least resistance.
However, it is important to consider that the Nasdaq has already increased by nearly 40% this year, while bond prices are moving in the opposite direction, indicating expectations of higher interest rates and a potential recession. Therefore, it might be prudent to exercise caution and evaluate the situation before making further investment decisions.
Currently, it would require significant negative news to trigger a substantial market downturn.
Given the upcoming unemployment data release on Friday, it would be wise to analyze the results before making additional long-term investments.
Source: CBOE, Bloomberg
This commentary is written by James Gomes, a seasoned finance industry veteran with extensive experience of over 30 years, including a substantial tenure at a reputable U.S. bank exceeding 20 years.
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