Reflecting on the First Half of 2023: 5 Things of Note
As the markets closed on Friday, the first half of 2023 officially came to an end. Market performance is one thing, but it may have been one of the most eventful six-month periods in recent memory. Here are 5 things that stood out in the first half of 2023.
1. Big Tech is Back
Big tech is back in a major way. It has been well documented that much of the gains in the S&P 500 have been from the 7 biggest companies in the index. It is one of the reasons why the NASDAQ posted a better than 30% return in the first half. As of Friday, Apple (NASDAQ: AAPL) was trading at an all-time high price and had once again surpassed a $3 trillion market capitalization. NVIDIA (NASDAQ: NVDA) and Tesla (NASDAQ: TSLA) have risen by 190% and 140% respectively this year, while Meta Platforms (NASDAQ: META) is trading at fresh 52-week highs. If we are back in a bull market, there is no secret as to who is leading it.
2. The AI Bubble
Is AI a bubble? Or is it a major secular shift that will change global industries forever? It might be a bit of both right now, especially when we look at AI-related stocks. Along with NVIDIA, stocks like C3.AI (NYSE: AI), Palantir (NYSE: PLTR), and AMD (NASDAQ: AMD) have all seen major surges this year. Will this performance continue into the second half? As long as major tech companies continue to invest in AI, it is likely going to stick around.
3. Are Banks Safe Yet?
One of the defining moments of the first half of the year was the regional banking crisis. This saw the collapse of some banks like Silicon Valley Bank and First Republic Bank. So are banks safe to invest in now? It’s hard to say. The economy is still volatile and inflation is still higher than the Fed’s target rate. One good sign is that all 23 of the largest banks passed the Fed’s stress test recently, which means they are equipped to handle a major recession and real estate collapse in the US.
4. Is This a Bull Market?
The stocks say yes but the economy says no. Fed Chairman Powell already stated that there are likely going to be one or two more rate hikes this year. He also said that inflation will not be at the target rate of 2% until potentially 2025. Yet, stocks are trading at all-time highs. Something is off and the Fed has control over it. Soften expectations for the second half because we could see some sideways trading or a pullback to more reasonable valuations.
5. Time to Buy Bitcoin?
Last week, Wall Street giant Blackrock (NYSE: BLK) applied to the SEC for a Spot Bitcoin ETF. So too did other institutions like Fidelity, despite already being rejected by the SEC previously. The SEC has stated that the applications are inadequate due to a lack of security to prevent market manipulation. The truth is, the SEC is running out of reasons to not allow a Spot Bitcoin ETF, especially with a company like Blackrock applying for it. If any of these ETFs are approved, the price and demand for Bitcoin could skyrocket.
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