Broker Check

Market Recap

July 01, 2023

Markets traded in a narrow range during the second half of June. June 16th saw a rare phenomenon, a “quadruple witching” where four types of options and futures contracts expire on the same day. Add in a quarterly rebalancing of indexes and trading volume was expected to be extraordinarily high.1 Despite the hype, markets closed modestly down.

On the economic front, things still remain positive. While official numbers are yet to be released, preliminary numbers suggest that the U.S. Economy likely grew at 2% for the second quarter of 2023.2 Most significantly, the continued growth of the economy proves we are not in a recession, which seemed like a foregone conclusion a few months ago.

How have we avoided a recession so far? The labor market continues to be extremely tight. Although job openings are dropping, at the end of April,10.1 million openings remained. For context, March 2022 saw a peak of 12 million– while the pre-pandemic peak of January 2020 was 7.2 million. Furthermore, while there has been an uptick in initial unemployment claims, continuing claims numbers remain low suggesting that laid-off workers are able to find alternative employment quickly. 3

Inflation continues to trend downward, although not as quickly as the Federal Reserve (the Fed) would like. The Consumer Price Index (CPI) peaked at 9.1% in June of 2022; since then it has fallen for the last 11 consecutive months, landing at 4% for May 2023.

Challenges certainly remain on the horizon. We are currently tracking the commercial real estate market (more employees working from home means more empty offices and more online shopping means fewer shoppers at malls) and the relative strength of regional banks (which tend to be more vulnerable to current economic trends). 

However, it is nice to take a moment to look back over the past 6 months and remark, “Hey, things aren’t as bad as we predicted them to be!” In fact, things remain pretty good.

Reviewing returns for the second half of June, the markets were essentially flat. As of the market close on June 30th, the Dow was down less than a point, the S&P 500 gained 24 points (.55%) and the NASDAQ Composite Index (NASDAQ) rose 5 points (.04%). “S&P 500, NASDAQ rally for sixth straight day as traders hope Fed’s rate-hiking cycle is nearly over” June 15, 2023

2, 3 “Waiting for a Negative” Dr. David Kelly June 27, 2023

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Past performance is no guarantee of future results. No person or system can predict the market. There is no guarantee that any strategies discussed will result in a positive outcome. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. The NASDAQ is an index that tracks the cumulative results on a market capitalization basis of all stocks trading in the NASDAQ system. The Dow Jones Industrial Average is a widely watched index of 30 American stocks thought to represent the pulse of the American economy and markets. Investors cannot invest directly in an index. Diversification does not guarantee a profit or protect against a loss.