The US stock market was approaching the end of the year strongly, pushing the S&P 500 index ever closer to record territory. In a look back to 2023, data provider FactSet analyzed the biggest daily market moves in both directions.
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February 21: -2%
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March 9: -1.85%
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March 22 -1.65%
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April 25: -1.58%
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September 21: -1.64%
It's an interesting summary, with the biggest moves attributed to the performance of mega-cap tech stocks, a spring bout of banking turbulence and, of course, the Fed's battle against inflation, FactSet's Torstein Jakobsen noted in a blog post.
The 10 best performing days for the S&P 500
SPX
contributed to an aggregate increase of 18.35% for the index, while the last 10 days represented a collective decrease of 16.2%.
The S&P 500 is up 24.4% year to date through Tuesday's close, ending less than 0.5% from its record finish on January 3, 2022. The Dow Jones Industrial Average
DJIA
has gained 13.3% in 2024, while the tech-heavy Nasdaq Composite
COMP
has shot up 44%.
Through December 22, the S&P 500 recorded 132 positive days and 113 negative days. Meanwhile, the market was quieter in 2023, with just 63 trading days recording a price swing of more than 1% through December 20, not far from the 10-year average of 59. Last year, when the S&P 500 fell more than 19%, with the index recording 122 trading days with moves up or down more than 1%.
Interestingly, the two biggest moves came early and about six weeks apart. The S&P 500 soared 2.28% on January 6, after December employment data They offered signs that the Federal Reserve's rate increases were effectively cooling the economy without triggering a recession, Jakobsen said.
That didn't mean concerns about rising interest rates went away. The S&P 500 fell 2% on Feb. 21, marking its worst performance of the year, largely due to fears about further interest rate increases, Jakobsen wrote.
FactSet found that concerns about Federal Reserve policy and inflation remained central to market sentiment throughout the year, influencing six of the 12 most volatile days.
Year-on-year inflation, measured by the consumer price index, fell from a high of 9.1% last year to 6.4% in January 2023, and to 3.2% in October. That allowed the Federal Reserve to slow the pace of rate hikes, achieving four quarter-point increases in 2023 and pausing after July.
The strategy "indicates the Fed's measured approach in moderating policy to stabilize the economy while mitigating market disruption," Jakobsen said.
The second worst day of the year occurred on March 9, when the S&P 500 suffered a significant sell-off, falling 1.85%. This slowdown was largely attributed to growing concerns about the value of U.S. banks' bond portfolios, exacerbated by SVB Financial Group's announcement of a $1.75 billion and $500 million common stock preferred offering. convertibles.
SVB soon collapsed, which sparked what some called a โminiโ banking crisis, exacerbated by the collapse of Swiss banking giant Credit Suisse, raised fears of an immediate credit crunch that could send the economy into recession. Fears that were soon considered exaggerated.
Of course, no discussion of 2023 is complete without a look at the extremely unbalanced performance of the market, characterized by the so-called Magnificent 7 mega-cap tech stocks: Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Amazon.com Inc.
AMZN,
Nvidia Corp.
NVDA,
Alphabet Inc.
GOOD,
GOOGLE,
Tesla Inc.
TSLA,
and Meta Platforms Inc.
GOAL,
See: The Magnificent 7 dominated 2023. Will the rest of the stock market soar in 2024?
Despite a broadening of the rally at the end of the year, the biggest names have accounted for a notable portion of the rally, leaving much of the market behind.
The S&P 500 saw its third biggest move of the year on April 27, rising 1.96% after a round of strong gains from big tech companies. Meta led the rally, rising 14% following its earnings that beat expectations, further helped by its strategic investments in artificial intelligence, Jakobsen said.
In the chart below, FactSet takes a look at the slightly broader top 10 contributors, which include both Alphabet share classes, Broadcom Inc.
AVGO,
and Eli Lilly & Co.
L.Y.,
demonstrating his weight in acting is extraordinarily high:
data set
The top 10 accounted for 75% of the S&P 500's weighted average return, well above the average of 39% from 2014 to 2022, Jakobsen noted.
Nvidia, up 229%, has stood out, contributing 2.77% to the overall performance of the S&P 500, he wrote, and the company's success is largely attributed to its data center business, which benefited of the demand for advanced artificial intelligence infrastructure.
See also: Are the 'Magnificent Seven' Ready for Another Bull Run? What to expect from tech stocks in 2024.
