Markets “In A Nutshell” for January 23, 2023

Markets “In a Nutshell” for January 23, 2023

Investment Week at a Glance

Stocks finished mixed for the week.  The Dow Jones Industrial Average fell 2.70%, the S&P 500 was down 0.70%, and the NASDAQ rose 0.60%. Foreign stocks (MSCI EAFE) were down, falling 0.50%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 3.48%.  (Data source: Wall Street Journal)

NASDAQ Continues to Outperform for the Year

The NASDAQ, which includes mostly tech and growth stocks, is now up over 6% for the year and outperformed the Dow Jones by over 3% in the last week. Tech had been hit hard in 2022 as rates rose quickly which hurt growth stocks more than any other sector. As rates seem to stabilize and inflation seems to have peaked last year, tech has begun to lead the market once again. Although it is early in the year and much can change, this may be a theme of 2023 as investors look to get back into the tech sector as many have moved away from tech to avoid further losses. If we were to see inflation tick back up and rates make a substantial move higher, tech would once again be among the hardest hit.

U.S. Debt-Ceiling

On Thursday the US officially reached its debt limit of $31.4 trillion causing the Treasury to begin “extraordinary measures”, which include suspending the sale of certain government securities. Although this is not good news, this is not uncommon for the U.S. to do as the U.S. has had to raise the debt limit 78 times since 1960. The Treasury has also had to use these “extraordinary measures” 6 times before Congress has reached a deal. Many expect a deal to be reached around July at the last minute. As long as a deal is reached it is unlikely this will have too big of an impact on markets in the long term but may cause some worry in the short term. In looking at the 1995, 2011, & 2013 standoffs, in the 12 months following a deal, the market rose by an average of 12.8%. These 3 standoffs were seen as major ones due to the Government shutting down and in 2011 the S&P downgraded U.S. credit rating.

Quiz:

Quiz

What was the percentage decrease in the NASDAQ in 2022? (Scroll Down for Answer)

1.    -19%
2.    -25%
3.    -29%
4.    -33%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

Answer:

4)   -33%.  The NASDAQ had the worst year for the major indexes in the United States in 2022 but looks to change that in 2023 as it has so far been the leader in the first few weeks of the year.