After a two-year high, technology stocks lead an astonishing rebound in Pro UltrPro Shrt S&Pro 500.
Technology stocks led the astonishing rebound of the S&P 500 index in 2022, reaching a new closing high and intraday high in the past two years. This rebound was mainly driven by the seven giants, namely Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla. Investors have raised their expectations for these companies' profit growth due to the advancement of artificial intelligence and cost reduction, while the expectation of a rate cut by the Federal Reserve has also fueled the rebound of the US stock market. After experiencing a significant decline in 2022, the technology sector has outperformed other sectors since hitting bottom, becoming the leader of the rebound in 2023.
Zhitong App learned that last Friday, the S&P 500 index hit a new closing high and intraday high for the first time in two years, rebounding astonishingly after the fierce sell-off in 2022. This rebound was driven by the so-called "Big Seven" - Apple (AAPL.US), Microsoft (MSFT.US), Nvidia (NVDA.US), Alphabet (GOOGL.US), Amazon (AMZN.US), Meta (META.US), and Tesla (TSLA.US) - and was largely based on investors' expectations of AI and cost-cutting driving profit growth for these companies. In addition, the Federal Reserve seems to have completed its rate hikes and is now considering when to cut rates. The market's growing expectations of a rate cut by the Federal Reserve have also been a significant driver of the rebound in US stocks.
The following five charts show the astonishing rebound of the S&P 500 index.
From the previous record high in early January 2022 to the new record high last Friday, there were 512 trading days in between, the longest gap in over a decade. However, in historical terms, this 512-day gap is not that long. In the 1970s, due to soaring inflation and stagnant economic growth, the S&P 500 index did not hit a new high for over 7 years.
After reaching the previous record high in early January 2022, the S&P 500 index fell to a closing low of 3,577.03 points on October 12, 2022, a quarter of its value. The sharp decline in the S&P 500 index was due to the impact of rising interest rates on fast-growing tech companies, as well as the Russia-Ukraine conflict causing oil prices to soar above $100 per barrel and partially inverting US bond yields. However, since then, the market value of the index has increased by over $10 trillion, rebounding from the fierce sell-off in 2022.
Since the bottom of the S&P 500 index, technology stocks have outperformed other sectors.
The information technology, communication services, and non-essential consumer goods sectors have led the rebound of the S&P 500 index in 2023, which are also the sectors where the "Big Seven" are located. In the first half of 2023, the performance of the seven largest companies in the S&P 500 index exceeded that of other companies in the index, achieving the best performance since the bursting of the dot-com bubble in 2000. Among them, Apple's market value surpassed $3 trillion again in December last year after a nearly 50% increase.
NVIDIA has been the biggest contributor to the S&P 500 index's gain since October 2022, with a gain of over 400%. NVIDIA's significantly better-than-expected performance guidance given in May last year sparked an AI frenzy, driving the stock to soar in 2023. Royal Caribbean Cruises (RCL.US), AMD (AMD.US), Meta, and Broadcom (AVGO.US) followed closely behind.
The worst-performing stocks in the S&P 500 index since the low point in 2022
In addition, due to the impact of the regional banking crisis in the United States, First Republic Bank and Silicon Valley Bank were the two worst-performing stocks in the S&P 500 index last year. First Republic Bank was eventually acquired by JPMorgan Chase (JPM.US), while Silicon Valley Bank went bankrupt. Lumen Technologies (LUMN.US), Advance Auto Parts (AAP.US), and Enphase Energy (ENPH.US) also experienced significant declines during the same period, with their stock prices falling by about 60% since October 2022. Most of these underperforming stocks are no longer part of the S&P 500 index.