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Stock Rally Continues Led by Tech Sector

Stock Rally Continues Led by Tech Sector

May 30, 2023

Last Friday the S&P 500 and Nasdaq both had their highest closing prices since August of 2022. The broader market, as defined by the S&P 500, continues to make small, quiet moves to the upside while the Nasdaq is making more noise with powerful advances.

Artificial intelligence has the attention of investors and is propelling the tech heavy Nasdaq to 31% gains year-to-date. This rally has been extremely powerful, and it makes one wonder whether it can continue to rally through the end of the year. The answer is yes, but investors need to be realistic about continued gains in the Nasdaq this year. Exceeding 30% returns is not common but in the last 20 years there have been some very big upside years for the Nasdaq: 2020 – 49%, 2009 – 55%, and 2003 – 50%. Notably, each of these years were proceeded by a bear market and this year also falls into that category. If A.I. excitement and spending continues, 2023 could be included in this short list of exceptional years.

The bigger hope is that the market rally in tech stocks will broaden out to the overall stock market. The S&P 500 is up 10% this year and could potentially end the year with a 20 – 30% return if more sectors of the economy participate in the rally.

Photograph by: Alex Knight ´╗┐on Unsplash

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