Stock-market rallies always end. They also make it easy to forget how difficult it can be to avoid the temptation to sell into a declining market, which some investors may now regret having done during the brutal beating in 2022.
Here’s why most investors shouldn’t try to time the stock market.
Then again, corporate chief financial officers are pretty good at timing purchases and sales of their own companies’ shares, as Mark Hulbert reports.
The Dow Jones Industrial Average
DJIA,
ended a 13-session winning streak on Thursday, as investors were spooked again by strong economic numbers.
The Federal Reserve’s cycle of interest-rate increases has helped bring down official inflation numbers, but economic growth in the U.S. has been accelerating, according to government data. Predictions of a recession are being replaced by expectations for a “soft landing” among money managers interviewed by Vivien Lou Chen.
These market patterns, shared by Denise Chisholm, Fidelity’s director of quantitative market strategy, shared with Jamie Chisholm (no relation) supply the notion that the rally in technology stocks may continue.
Then again, consumer confidence surveys provide a warning about the stock market’s health, according to Mark Hulbert.
Market Extra: Why U.S. stocks and bonds stumbled on talk of a Bank of Japan policy tweak
Breaking down the stock-market rally
The sectors that suffered the worst during the 2022 stock-market rout have been leading the 2023 recovery. Here’s a roundup of performance for the 11 sectors of the S&P 500 with dividends reinvested through July 27, with broad indexes at the bottom:
| Sector or index | 2023 return | 2022 return | Return since end of 2021 | Forward P/E | Forward P/E – Dec. 30, 2022 | Forward P/E – Dec. 31, 2021 |
| Information Technology | 44.3% | -28.2% | 3.6% | 27.3 | 20.0 | 28.2 |
| Communication Services | 42.5% | -39.9% | -14.4% | 17.2 | 14.4 | 21.0 |
| Consumer Discretionary | 33.1% | -37.0% | -16.2% | 27.1 | 21.5 | 34.2 |
| Industrials | 12.4% | -5.5% | 6.3% | 19.1 | 18.4 | 21.3 |
| Materials | 10.0% | -12.3% | -3.5% | 18.3 | 15.7 | 16.6 |
| Real Estate | 4.6% | -26.1% | -22.7% | 17.1 | 16.9 | 24.7 |
| Financials | 3.7% | -10.5% | -7.3% | 13.8 | 12.9 | 16.1 |
| Consumer Staples | 2.9% | -0.6% | 2.3% | 20.3 | 20.6 | 21.4 |
| Healthcare | 0.0% | -2.0% | -1.9% | 18.0 | 17.7 | 17.2 |
| Energy | -0.7% | 65.7% | 64.6% | 11.8 | 9.8 | 11.1 |
| Utilities | -3.2% | 1.6% | -1.7% | 17.3 | 18.7 | 20.4 |
|
S&P 500 SPX, |
19.3% | -18.1% | -2.3% | 19.5 | 16.8 | 21.5 |
|
Dow Jones Industrial Average DJIA, |
7.7% | -6.9% | 0.3% | 17.8 | 16.6 | 18.9 |
|
Nasdaq Composite Index COMP, |
34.9% | -32.5% | -9.0% | 27.7 | 22.6 | 32.0 |
|
Nasdaq-100 Index NDX, |
42.0% | -32.4% | -4.0% | 27.0 | 20.9 | 30.4 |
| Source: FactSet | ||||||
Notes about the sector and index data:
-
The S&P 500
SPX,
+1.06%
is up 19.3% this year, but it is still down slightly from the end of 2021. Its forward price-to-earnings ratio has risen considerably in 2023, but also is lower than it was at the end of 2021. - The S&P 500 information technology sector has led the market this year with a 44% gain, but it is still up only slightly from the end of 2021. Its forward P/E is including closer to where it was at that time.
-
The communications services sector includes tech companies that have been major contributors to this year’s rally, since the S&P 500, Nasdaq Composite Index
COMP,
+7.18%
and Nasdaq-100 Index
NDX,
+1.99%
are all weighted by market capitalization. The largest names in this sector are Meta Platforms Inc.
META,
+4.06%
and Alphabet Inc.
GOOGL,
+3.10% GOOG,
+3.01% ,
which make up 5.6% of the SPR S&P 500 ETF Trust
SPY,
+1.06% ,
which aims to track the benchmark index by matching its weighting. Shares of Meta are up 159% this year, following a 64% decline in 2022. Even after this rally, the stock is still down 7% from the end of 2021. Alphabet’s Class A shares have risen 47% this year, after a 39% tumble last year. The stock is down 11% from the end of 2021.
Big tech, earnings and the Ratings Game
Meta, Microsoft Corp.
MSFT,
Alphabet and Intel Corp.
INTC,
all announced quarterly results this week. Here is coverage of how analysts and investors reacted to the news, from The Ratings Game column:
RTX’s engine problems and how they might affect other companies
On Tuesday, RTX Corp.
RTX,
formerly known as Raytheon, announced that some aircraft engines made by its Pratt & Whitney unit would need to be removed from service for inspection, because of what appears to be a long-term manufacturing problem.
Here is a list of U.S. airlines expected to be disrupted as RTX works through the inspections of the affected engines, which are used in part of the Airbus SE
AIR,
A320neo family of narrow-body airliners.
Other coverage of aerospace and airlines:
The next hot housing market
The next active housing market in the U.S. might be in the Midwest, and Aarthi Swaminathan explains why.
U.S. pending home sales rose slightly during June, according to the National Association of Realtors, whose chief economist Lawrence Yun said: “the housing recession is over.”
That may be a surprise to people looking to buy houses in a market filled with homeowners who are content to stick with their low-rate mortgage loans rather than sell and face rates of 7% or higher.
This is what it might take to encourage people to put more homes on the market.
Chances are someone you know can benefit from this detailed advice
If you are running a human-resources department or in charge of renting out a large number of apartments, you might use broad methods to screen out potential candidates. You might exclude anyone with a criminal record, no matter what the crime may have been or how long ago it took place. An estimated 78 million people in the U.S. have criminal records, and they can face great difficulty finding any employment or rental housing.
Emma Ockerman looks into this problem and provides clear steps that can be taken by affected people looking for jobs or places to live and even how they might remove items from their public records.
Read on: Biden takes new steps to protect renters — including helping them fix faulty tenant-screening reports
Help with retirement planning
Quentin Fottrell — The Moneyist — helps a woman who is 61 and single and is having difficulty earning a living and planning for retirement.
More from The Moneyist: After our mother died, my sister went to nursing school. She asked me to cosign her $11,000 student loan. What do I tell her?
What’s going on with Tupperware?
Tupperware Brands Corp.
TUP,
provided dire warnings to investors in April of accounting problems, a potential liquidity shortage and even “doubts regarding its ability to continue as a going concern.”
But the company’s stock soared 343% from the close on July 20 through July 27. James Rogers looks into the action to find out what traders are thinking.
This new fund is designed to gain from a long-term demographic trend
The Gabelli Financial Services Opportunity ETF
GABF,
has been a stellar performer since it was established in May 2022. In an interview, its portfolio manager Macrae Sykes explained how it is positioned to take best advantage of the aging of the U.S. population by focusing on financial services companies that are becoming more profitable as they focus on managing clients’ money.
What to stream in the coming month
Mike Murphy makes life easier for TV viewers, by summarizing what content will become available, and what will disappear, in August:
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