The Stock Market Ran With The Bulls After All

The Stock Market Ran With The Bulls After All
Daniel Johnston

5 months ago2 mins

What’s going on here?

The stock market didn't just ignore the bearish forecasts in the first half of the year: it decided to run with the bulls.

What does this mean?

Analysts were in a serious funk when 2023 first rolled around, predicting a bear market and warning of a looming recession. But it looks like the S&P 500 decided to prove them wrong. See, it’s not just up a bit: it climbed a staggering 16% in the first half of the year, roaring past many pundits’ full-year predictions.

S&P 500
Source: Google Finance

One driver of that has been the boom in AI: after all, it lit a fire under tech stocks, including the likes of Nvidia and Microsoft, and that’s warmed the entire market. It also doesn’t hurt that the US economy is trundling along much better than anyone expected, with solid, upwardly revised 2% growth in the first quarter helping to keep those recession whispers quiet.


Why should I care?

The bigger picture: No crystal ball.

This rally is a reminder that expert predictions, while often insightful, are still just predictions – and this year, they didn't quite hit the mark. Stocks have proven to be more than a reliable guard against inflation too, outpacing the rate of price rises. And that’s no shocker: a lot of canny companies have managed to foist cost increases onto customers, cushioning the blow to their own profit margins.

For markets: Later or later.

With inflation coming down, investors have been hoping that stock-boosting interest rate cuts could be on the cards sooner or later. But this week the Federal Reserve essentially trashed any prospects of that “sooner” option: the central bank signaled that it’s planning to keep on hiking rates in a bid to fully stamp out price pressures – despite pausing hikes just last month. And that nasty little surprise could make it hard for stocks to continue their upward march.

US interest rates


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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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