The S&P 500 ended the second quarter and first half of 2023 at a 14-month high, and most major stock indices logged solid gains in the second quarter following a pause in the Fed’s rate hike campaign, stronger-than-expected corporate earnings (especially in the tech sector), and the relatively drama-free resolution of the debt ceiling.
In sum, markets were impressively resilient in the second quarter and throughout the first half of 2023, as better-than-feared earnings, expectations for less-aggressive central bank rate hikes, more evidence of a “soft” economic landing, and relative stability in the regional banks pushed the S&P 500 to a 14-month high.
The second quarter of 2023 saw an acceleration of the tech sector outperformance witnessed in the first quarter, as AI (artificial intelligence) enthusiasm drove several mega-cap tech stocks sharply higher. Those strong gains resulted in large rallies in the tech-focused Nasdaq and, to a lesser extent, the S&P 500 as the tech sector is the largest weighted sector in that index. Also like in the first quarter, the less-tech-focused Russell 2000 and Dow Industrials logged more modest, but still solidly positive, quarterly returns.