The first half of the year is almost over and the stock is up almost 15%.

Why it's important: The rally, which some believe is the initial phase of a new bull market, reflects relief that inflation has eased without a recession, as well as a dash of speculative spice in the form of artificial intelligence.

In the numbers:

The S&P 500 rose 14.5%.

The Nasdaq Composite technology index rose 29.9%.

The small-cap Russell 2000 index - driven by expectations of the US economy in the relatively short term - rose 6.8%.

Context: After a terrible year in 2022 - the S&P's 19.4% decline was the worst since 2008 - investors were entering this year pretty damn bearish. And with good reason...

Inflation was still above 6%.

More Fed rate hikes were expected.

As a result, almost everyone was predicting a recession - and brutal corporate profits.

Moreover, there was a non-negligible risk that the United States would default on its debts, triggering a financial crisis.

Yes, but: Things worked out fine. Inflation is now at 4%, and the Fed has breathed a sigh of relief when it comes to raising rates. The debt ceiling deal has been struck and the US economy is much stronger than many expected. Corporate profits have been okay.

Even the worst banking panic since the financial crisis, which erupted in March with the collapse of Silicon Valley Bank, did not weigh on the market for long.

Be smart: There's an old aphorism on Wall Street that stocks like to climb the "wall of worry."

Translated, "Risk aversion": stocks tend to rise when investors start out as pessimists, but gradually gain confidence when the ugly scenarios they feared don't materialize.

That's essentially what happened in 2023.

What's next: Some believe the continuation of the rally hinges on whether the remaining bears can gradually turn into bulls.

Goldman Sachs analysts, for their part, say economic news - such as Thursday's better-than-expected GDP revision - will likely continue to come in rosy.


If the rest of the year would just go sideways, it's actually quite a successful year... but we're only halfway through, unfortunately... :)

Everything brings with it a positive. Are we gonna grow? Great, more profits, which hopefully we'll collect in time. Go down? Great, we'll buy more and it will add up over time. 👍

As we've already written but otherwise I'll add here too, nice perspective and I also like the optimism that is relatively prevalent. The truth is that at the end of last year the scenarios for this year were worse and no one expected us to go up for 6 months. I'm not declaring disaster, but I would also rather expect a cooling of the markets in the late summer and fall, with the possibility that it could come back at the end of the year. 😊

I'm probably far more pessimistic than you about future developments. But I like your optimism.

The growth is indeed significant, but I do not expect it to last at this pace until the end of the year. The beginning of the summer is usually not the best, but towards the end it gets fixed. It will be interesting to watch. I do think there should be a cooling off, but it's up to investors how deep it will be.

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