Stock Market Rally Loses Steam As US CPI Expected to Rise 0.5%
By US stocks have posted a strong start to 2023 following a bear market last year, with the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite indexes rallying 2.8%, 7.7%, and 14.3%, respectively.[0] However, the stock market rally is beginning to lose steam, with the Nasdaq and S&P 500 suffering their worst weekly runs in nearly two months.[1]
The Federal Reserve's aggressive rate hikes in 2022 were meant to cool the economy and curb inflation, and investors are now wary of the possibility that the central bank might not ease up on its tight monetary policy.[2] With the US Consumer Price Index (CPI) expected to rise 0.5% month-on-month for the first time in three months, the stock market is seeing an increase in volatility as investors get ready for Tuesday's inflation print.[2]
The four biggest yearly gains for the S&P 500 since 1950 have occurred after the stock market experienced a losing year, and if the S&P 500 rebounds by 25% or more this year, it will fit well within historical trends.[3] However, the S&P 500 is still 14% off its high and investors should treat the current situation as a buying opportunity.[4]
Tesla is currently leading the pack with a 68.3% gain, while Nvidia, Warner Bros.[5] Discovery, Royal Caribbean, and Meta Platforms have gained 52.9%, 51.6%, 48.8%, and 47.9%, respectively.[5] Additionally, Monolithic Power Systems, Carnival, and Norwegian Cruise Line have advanced 44.4%, 43.1%, and 38.2%, respectively.
0. “Why 2023 Will Be the Year of the Stock Picker” Zacks Investment Research, 13 Feb. 2023, https://www.zacks.com/commentary/2053502/why-2023-will-be-the-year-of-the-stock-picker
1. “US stocks notch worst weekly run in 2 months, showing signs of fatigue” Markets Insider, 13 Feb. 2023, https://markets.businessinsider.com/news/stocks/stock-market-rally-fizzling-out-nasdaq-sp500-inflation-2023-2
2. “The stock market rally of 2023 is losing steam – the Nasdaq and S&P 500 just notched their worst weekly runs i” Business Insider India, 13 Feb. 2023, https://www.businessinsider.in/stock-market/news/the-stock-market-rally-of-2023-is-losing-steam-the-nasdaq-and-sp-500-just-notched-their-worst-weekly-runs-in-nearly-2-months/articleshow/97882186.cms
3. “Why History Says 2023 Will Be A Banner Year For Stocks” Benzinga, 8 Feb. 2023, https://www.benzinga.com/trading-ideas/long-ideas/23/02/30819221/why-history-says-2023-will-be-a-banner-year-for-stocks
4. “History Says the S&P 500 Could Soar in 2023 — 2 Perfect Stocks to Buy Before the Rebound” The Motley Fool, 10 Feb. 2023, https://www.fool.com/investing/2023/02/10/sp-500-could-soar-in-2023-2-perfect-stocks-to-buy/
5. “The stock market rally of 2023 has surprised even Wall Street veterans. Here are the 10 best-performers on the” Business Insider India, 10 Feb. 2023, https://www.businessinsider.in/stock-market/news/the-stock-market-rally-of-2023-has-surprised-even-wall-street-veterans-here-are-the-10-best-performers-on-the-sp-500-and-what-could-be-driving-them-/articleshow/97804900.cms
