Happy New Year!
2023 was a "magnificent" one for investors, even those that owned more than that famous septet of stocks that dominate the S&P 500.
How great of a year was it for the stock market? Especially the vaunted Magnificent Seven of the Nasdaq? Consider this. Apple shares surged nearly 50% in 2023. And that makes Apple the laggard of the group. Microsoft and Google owner Alphabet were each up more than 55%. Amazon soared 80%. Tesla has more than doubled. Then there’s Meta and Nvidia. The Facebook/Instagram/WhatsApp/Reels/Threads, etc. etc. owner skyrocketed more than 190% while Nvidia, riding the AI hype wave, gained an astonishing 235%.
The success of this septet is a big reason why the S&P 500 is up more than 23% in 2023 and the Nasdaq has gained nearly 45%. But several other techs have thrived as well. Salesforce led the Dow, nearly doubling this year. And Nvidia rival Intel also had a stellar year, gaining more than 90%. Fellow chip giant AMD was a winner in the S&P 500, jumping more than 125%. And semiconductor colossus Broadcom more than doubled too.
Still, the epic rally of 2023 was about more than Big Tech. Consumers are still spending as recession fears and Covid concerns ebbed. Cruise companies Royal Caribbean and Carnival both gained more than 100%, putting them in the top ten of S&P 500 performers for the year. Rival Norwegian also gained more than 65%. And in another sign of how consumers are traveling again, Booking.com and Expedia were each up about 75% while hotel giants Marriott and Hilton each closed out 2023 near record highs.
Ridesharing and food delivery giant Uber, which just entered the S&P 500 in early December, more than doubled too. Consulting giant Accenture, which has its own AI related business, soared almost 165%….trailing only Nvidia and Meta in the S&P.
And then there’s the housing market. Despite worries about high mortgage rates, demand for homes continues to soar. Builders are booming…and the recent drop in long-term bond yields as the market bets on Federal Reserve rate cuts in 2024, could lead to another housing boom. Materials supplier Builders FirstSource was the fifth-best performer in the S&P 500 this year, sporting a more than 150% gain. Builder Pulte more than doubled as well. Lennar and DR Horton were up 65% and 70% respectively.
Can the good times keep rolling in 2024? The encouarging news is that there is a growing consensus that the Fed may stick a previously elusive soft landing for the economy, guiding the US into a slightly slower growth mode where inflation cools but there is no recession. That may be easier said than done. But investors are also betting that the Fed may start cutting interest rates as soon as the spring. So there are fewer worries that the central bank is actually going to derail the economy by keeping rates higher for longer.
There are other risks though. Inflation could pick back up if the Fed actually does cut rates multiple times next year. The upcoming presidential election could create volatility as well. It would be a big surprise if the broader market (and the Mag 7) continue to surge as much as they did this year. But while smaller gains may be in the cards for 2024, any gains at all would be welcome. At this point, the calls for a bear market are growing quieter. So here’s hoping that investors have a prosperous New Year…just maybe not as prosperous as this one.