Q2 2023 Market Commentary

Hello, it’s hard to believe that it’s the 2nd quarter of 2023 which means we are now half way through the year!  We hope you all are staying cool as we know many parts of the country have been experiencing record heat. 

We want to share our recap/summary of the past three months in the market and economy. 

At the beginning of the quarter, many investors were concerned about continued high inflation, more interest rate hikes, and concerns about the debt ceiling. In spite of all of this, the stock market ended higher in the second quarter. At the beginning of the quarter, many were concerned about a recession but at the end of the quarter, the economy remains strong.  

The US stock market rise was supported mostly by large tech companies that investors feel will benefit from advances in artificial intelligence (AI).  The tech-heavy NASDAQ index is now up almost 32%  for the year- it’s largest start since 1983. The S&P 500 is now up almost 16% so far this year- it’s 5th best start since 1990. 

However, it’s important to note that only a FEW stocks have brought up those two indices by so much. What are now being called “The Magnificent Seven” stocks – Alphabet (Google), Amazon, Apple, META (Facebook), Microsoft, NVIDIA, and Tesla- represented 92.5% of the gains. A good comparison would be to look at the Dow Jones Industrial Average which is up about 3.8% so far this year. Dow Jones Industrial Average is only 30 stocks- and of the Magnificent Seven stocks, only Apple and Microsoft are included in this index. About half of the stocks in the Dow Jones Industrial Average are actually down so far this year, and about 40% of the stocks in the SP500 index are down so far this year.

It’s important to keep this in mind because it means that looking at an index return that is up because of just a few stocks does not tell the full story of the overall stock market. It is not reflective of a true diversified portfolio.

There are still some areas in the economy that we are watching. Inflation is still not where the feds want it to be. Personal spending is still high.  Just one example, TSA just reported that this past Sunday before 4th of July, a record 2.883 million people traveled through TSA checkpoints. This beat the previous record of 2.882 million people in 2019. This means people are still out there traveling and spending money, which adds to inflation. 

The feds have indicated that they are not finished rising interest rates, which is still causing some volatility in the bond markets. On the bright side, yields on bonds now is higher and is helping people who rely on fixed income for their retirement income sources.

So while the market has made some nice gains so far this year, we are still cautiously optimistic about the rest of the year. Because it is only a small handful of stocks that are supporting that rise, we believe this continues to highlight the importance of ACTIVE management and DIVERSIFICATION in your portfolio.

Looking ahead, we expect to see the Feds continue to watch inflation and personal spending with possibly one or two more interest rate increases before they start to pause rate hikes. We will continue to watch the US and global economic growth for possible recession signals but so far, these indicators seem to be holding steady. 

As always, feel free to contact your financial advisor if you have any questions about your portfolio. 

Adrianna Environmental B&W

Adrianna Rocha

Client Relations Representative

240-379-6929 V
240-439-6889 VP
512-379-6909 FAX

Adrianna Rocha joined Kramer Wealth Managers in 2021.

Adrianna is responsible for client experiences and service. As part of the customer service team, she strives to help and provide top-notch service to our clients. As part of her role, she communicates with clients through videophone, schedules client meetings, prepares and processes forms, and gathers information for our advisors.

Adrianna Rocha graduated with a Bachelor of Arts in Communication Studies from Gallaudet University in 2017. Before she joined our team, she worked in the customer service industry for nearly a decade. She excels in human-to-human relations and takes pride in not only her own accomplishments, but her clients’ as well. Adrianna enjoys chatting about her slight obsession with dogs, houseplants, essential oils, and food: especially Mexican food! She is also a proud fur-mama to her beautiful Aussie-mixed pup, Ziva.

Adrianna is not registered with Osaic Wealth.