Published: November 8, 2023 at 12:21 p.m. ET
The S&P 500 is up 14% in 2023. But if we excluded the gains from the best eight sessions so far, the index would actually be trading in the red.
According to Nicholas Colas, co-founder of DataTrek Research, a look at what happened during these eight sessions helps delineate the dynamics and themes that had the greatest impact on U.S. markets this year.
“Those…
The S&P 500 is up 14% in 2023. But if we excluded the gains from the best eight sessions so far, the index would actually be trading in the red.
According to Nicholas Colas, co-founder of DataTrek Research, a look at what happened during these eight sessions helps delineate the dynamics and themes that had the greatest impact on U.S. markets this year.
“These winning sessions were accompanied by positive news on short and long-term interest rates, big tech profits and the avoidance of a looming recession,” Colas said in written commentary shared with clients and MarketWatch Wednesday.
“These same issues remain relevant today and are the most likely catalysts for a further rally in U.S. stocks.”
At the very least, this analysis helps highlight the risks investors face when trying to time the market, a popular practice on Wall Street.
As the data shows, the margin for error given to investors in 2023 has been razor-thin. The number of days of increase in the index so far is only 11 more than the number of days of decline (113 according to Colas, compared to 102).
“The adage that the stock market goes up the stairs but the escalator goes down is absolutely true. Stairs take more time and can sometimes seem exhausting. But it’s the only way to progress,” Colas said.
Below is a list of the eight days responsible for 2023’s gains, along with Colas’ explanation of what pushed the market higher.
- January 6 (+2.3%): “The best day of 2023 so far came after the December 2022 jobs report showed slower-than-expected wage inflation (+0.3% vs. +0.4%) and the December’s ISM Services Purchasing Managers’ Index reflected a contraction in activity.”
- April 27 (+2%): “META/Facebook shares rose 14% on better-than-expected earnings, following more strong first-quarter financial reports from Big Tech.”
- January 20 (+1.9%): “NFLX posted better-than-expected undergrowth in the fourth quarter, but the day’s outsized gains appear to have been driven primarily by bargain hunting on tech names that had taken a beating in late 2022 due to tax-loss selling . The NASDAQ rose 2.7 percent and closed up 9.1 percent from its Dec. 28 low.
- November 2 (+1.9%): “Yes, the 4th best day of the year was last week. As the FOMC passed on rate hikes in two consecutive meetings and Chairman Powell seemed satisfied with current monetary policy, 10-year Treasury yields fell from 4.79% to 4.67%.
- May 5 (+1.8%): “Apple’s better-than-expected revenue and profits sent the stock up 4.7% and supported investor confidence in the ongoing rally of major U.S. technology companies. JPMorgan’s rise in certain regional American banking stocks was a vote of confidence for this group, besieged by the bankruptcy of Silicon Valley Bank in March.
- March 16 (+1.8%) and March 14 (+1.6%): “After a rapid decline of 4.8 percent for the S&P 500 from March 6 to 13, the index began to rebound as banking regulators offered deposit guarantees to SVB and Signature Bank (on March 14 ) and that a consortium of major banks placed deposits in the First Republic. (on the 16th). There were widespread concerns that uncertainties surrounding the American banking system could cause a sudden decline in the availability of credit and lead to a recession.
- March 3 (+1.6%): “Stocks rebounded as 10-year Treasury yields failed to hold the 4% level.”
U.S. stocks were lower midday Wednesday as the S&P 500 SPX and Nasdaq Composite COMP struggled to extend their longest winning streak in two years. The Dow Jones Industrial Average DJIA was also lower on the day, down 50 points, or 0.2% to 34,099.