The 3-minute quarterly updated and insights for quarter 2 of 2023.
After a strong start to the year, stocks shrugged off bank woes, debt ceiling gridlock, and recession jitters to turn out a powerful Q2 performance. Is the bear market finally over? Will we see more volatility ahead? Let’s take a look at what happened in Q2 and what might be in store for Q3.
Key Takeaways
What should we take away from the first half of 2023? Things are looking up. Optimism drove markets in the first half and there’s reason to believe that positive trends could continue.
While a few key technology stocks contributed significantly to index growth, there are signs that the confidence is spreading to broader areas of the market.
This is a good sign and could potentially mean that we are in the early stages of a bull market. However, rallies don’t typically move in a linear fashion so it’s wise to expect pullbacks and corrections in the months ahead. Flexibility is sill key in today’s uncertain environment.
The big question has been, is a recession coming? That’s a tough question because the answer is still being hotly debated. Some economists believe the risk of a recession is decreasing and see only a 25% chance of recession in the next 12 months. Others see the pressure of high interest rates resulting in a “moderate” recession this year or next. Which prediction will be correct? We will have to wait and see.
Looking Ahead
Here are just some of the factors we are watching in the weeks and months ahead.
Interest Rates
The Federal Reserve has indicated that it
plans to raise rates again in 2023. The pace
and magnitude of those hikes are likely to
impact market sentiment.
Economic Data
Markets tend to reflect perceptions of the
economy, so investors will be closely watching the data on inflation, jobs, spending, housing, and other sectors.
Recession Indicators
Recession fears are still present and any data
suggesting economic growth is turning
negative will likely weigh on markets.
U.S Politics
Apprehension around new regulations and the
upcoming election season may influence markets.
War in Ukraine
The Russian invasion of Ukraine and Russian
leadership struggles may inject more global
uncertainty.
Technology Stocks
Exuberance around artificial intelligence
could give way to pessimism, causing selling
pressure on high flyers.
Markets have roared back since the 2022 doldrums, but expect volatility ahead.
Sources:
https://www.cnbc.com/2023/03/30/stock-market-today-live-updates.html
https://www.cnn.com/2023/04/06/investing/premarket-stocks-trading/index.html
https://www.morningstar.com/articles/1148371/a-positive-q1-2023-for-stocks-and-bond-markets-but-thecoast-isnt-clear
https://www.cnn.com/2023/03/28/economy/us-consumer-confidence-march/index.html
https://www.cnn.com/2023/04/06/investing/premarket-stocks-trading/index.html
https://www.blackrock.com/corporate/insights/blackrock-investment-institute/interactivecharts/geopolitical-risk-dashboard
https://www.fidelity.com/news/article/us-economy/202304061105RTRSNEWSCOMBINED_KBN2W315ZOUSBS_1
https://tradingeconomics.com/united-states/inflation-cpi
https://www.spglobal.com/ratings/en/research/articles/230327-economic-outlook-u-s-q2-2023-stillresilient-downside-risks-rise-12674669
https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/market-insights/guide-to-themarkets/mi-guide-to-the-markets-us.pdf#page=19
https://www.npr.org/2023/04/04/1168039533/the-inverted-yield-curve-is-screaming-recession
https://www.cnbc.com/2023/01/27/what-is-a-rolling-recession-and-are-we-in-one-experts-explain.html
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