General Market Commentary as of June 30, 2023
The second quarter of 2023 carried the momentum from the first quarter and continued its upward climb with all major US indices posting positive gains. The S&P 500 ended the quarter up 8.30%, the Dow Jones Industrial Average gained 3.41%, and the Nasdaq Composite soared 12.81%. Growth fared well in the quarter as it outperformed value. The same can be said for large caps as they outpaced small caps during Q2. Technology stocks made significant gains, driven largely by the enthusiasm for artificial intelligence.
The U.S. Federal Reserve (Fed) kept the federal-funds rate in a range of 5.00% to 5.25% following its meeting in mid-June. The central bank warned that it may raise the federal-funds rate by another 25 basis points (0.25%) at its next meeting in July. It also left open the possibility of yet another rate hike after that. Not long ago, markets were pricing in a June 2023 peak in the federal-funds rate, followed by at least three rate cuts before the end of 2023. Now, another increase is expected and a rate cut has been pushed out to early next year. Fed Chair Jerome Powell stated that the Fed remains committed to bringing inflation back down to the goal of 2%.
U.S. employment remains strong with notable increases in job openings and robust hiring. The Department of Labor reported U.S. payrolls expanded by a greater-than-expected total of 338,000 in May. Higher mortgage rates continue to weigh on the U.S. housing market. The National Association of Realtors (NAR) reported that sales of existing homes were down 20.4% versus the same period a year earlier. From the Department of Commerce, U.S. gross domestic product (GDP) grew at a better-than-expected annualized rate of 2.0% in the first quarter of 2023. Economists have been arguing when or if economic growth, inflation, corporate profits, interest rates, and equities will peak. Both optimists and pessimists alike have been confounded by the ebb and flow of the data and the gyrations of the financial markets. Even with mixed data reported, the market continued to show its resiliency through the first half of the year.
Market Recap
| Tot Return | 3-MO* | 12-MO* | 3-Year* | 5-Year* | Closing Value |
|---|---|---|---|---|---|
| S&P 500 | 8.30% | 17.57% | 12.81% | 10.36% | 4,450.38 |
| Dow Jones Industrial Average | 3.41% | 11.80% | 10.05% | 7.23% | 34,407.60 |
| NASDAQ Composite | 12.81% | 25.02% | 11.08% | 12.92% | 13,787.92 |
Source: Morningstar. The S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are unmanaged indexes. It is not possible to invest in an index. Past performance is no guarantee of future results. * Price only. Does not include dividends.
All overviews and commentary are intended to be general in nature and for current interest, educational purposes and factual reference only and are subject to change based on market and other conditions.
