As we approach the final few weeks of 2023, there’s no better time than now to look back and reflect on how the U.S. stock market has performed over the last year.
It’s no secret that economic headwinds such as stubborn and high inflation, as well as continued rate hikes from the Federal Reserve have had an impact on the broader market.
For many companies, they have seen their values plummet with extensive sell offs, but there have also been some unexpected exponential gains in certain stocks too.
The S&P 500
The S&P 500 is still regarded as one of the best indicators to give a snapshot of how the market has performed over a given period of time.
The index showed a lot of promise, rising by nearly 16% between January and June, and continuing this trajectory, eventually hitting a yearly high of 4,588 on July 31st.
However, the index was not able to sustain this rally, subsequently falling by 10% to 4,117 on 27th October.
Since this point there has been a strong recovery, and all investors are of course waiting in the hopes there will be a Santa Rally on the horizon.
The Winners and Losers
Some of the largest companies in the world with the strongest brands have witnessed challenging trading conditions, and subsequently seen their share prices plummet. This proves that seemingly invincible companies are not immune to tricky economic conditions.
The Estee Lauder Companies group is a prime example of this. The share price was around $253 on January 3rd, and after reaching $280, began declining throughout the rest of the year, reaching a yearly low of $104 on 1st November. This huge sell off, largely due to slowing sales as a result of softer demand from China, saw the value of the company fall drastically in months.
At the other end of the spectrum, we have a company like NVIDIA Corp. whose price skyrocketed from $143 to just under $500 as of 20th November. The company’s strong outlook and Artificial Intelligence (AI) potential was the main catalyst for this boom in the share price.
Sector Dependency
What has become apparent is that the technology sector has seen the most volatility, which is not necessarily bad, as it also has meant that tech companies have experienced gains that have outperformed the broader market.
The retail sector has been one of the worst performing sectors, partly due to soaring inflation and consumers putting off non essential purchases, especially in the luxury retail sector.
Summary
Whilst the market in 2023 has been volatile to say the least, it has still fared reasonably well overall, and there have been numerous extremely strong performers that have well outperformed the broader market. For those companies that have seen their share prices fall dramatically, it is likely that most of the damage has been done and they will see more a recovery, especially as rates stabilise and the Federal Reserve keeps working towards their inflation target of 2%.
