Page 80 - August_2023

FINANCIAL PLANNING
STOCK MARKET
PERFORMANCE –
WHAT’S NEW?
Acommon misconception in 2023 is that the market is still struggling. People tend to stick to pre-peak levels of their accounts and let that dictate their mindset
SECTOR PERFORMANCE
It is interesting to look back at a one-year snapshot and see how things have changed. What news media predictions came to
As shown, most sectors are doing very well this year. The tides have turned from 2022 when most sectors ended the year in red. It won’t go up every year, but long-term
by Cade Peterson, Financial Advisor
on the stock market. People may be surprised to hear that the stock market has actually rebounded quite well after the struggles of 2022. The S&P 500 is up close to 18% year- to-date as I write this article. Some sectors have done extremely well to start the year, while others have lagged a bit. Inflation is trending downwards which tells investors that the Federal Reserve is nearing the end
of rate hikes. The less aggressive stance by the Fed is showing light at the end of the tunnel. High prices have made it difficult for the average American to get by. Buying
a home is tough unless someone has enough capital to purchase the property in cash. Last year was a strange time and it took some adapting. However, what does the first half of 2023 tell us?
fruition? What are the driving factors of the stock market returns? We’re familiar with most of the problems in this country right now. The good news is that the majority
of these issues have already been priced in, which is why the market struggled last year. Inflation and rapid rate hikes spiked volatility in the markets. The reason for bringing up 2022 is because many people have developed a negative mindset, when in fact, there is a
lot to be positive about. Several sectors have done quite well year-to-date with technology leading the charge. Artificial intelligence has become a driving force causing companies like Nvidia’s and Broadcom’s stock prices to surge. This chart (shown opposite page) breaks down the performance of each sector over the last year.
equities have proven to offer very attractive returns. One might not expect financials to
be up 7.2% because of recent bank failures. Typically, a rising rate environment is good for banks because they are able to increase their lending rates and increase profitability on their balance sheet. Real estate was expected to decline this year. Unlike the stock market, real estate takes longer to feel the effects of
a struggling economy. This is why it is not surprising to see the market rallying and real estate struggling. As mentioned, technology has really taken off and has been a very large part of the positive performance this year. Over the last quarter, technology stocks rose 12% while the U.S. equity market rose only 5%. This goes to show that one sector is really carrying the weight of the performance.
78 SPEEDHORSE August 2023