Stock-market rallies always end. They also make it easy to forget how difficult it can be to avoid the temptation to sell into a declining market, which some investors may now regret having done during the brutal beating in 2022.
Here’s why most investors shouldn’t try to time the stock market.
Then again, corporate chief financial officers are pretty good at timing purchases and sales of their own companies’ shares, as Mark Hulbert reports.
The Dow Jones Industrial Average DJIA ended a 13-session winning streak on Thursday, as investors were spooked again by strong economic numbers.
The Federal Reserve’s cycle of interest-rate increases has helped bring down official inflation numbers, but economic growth in the U.S. has been accelerating, according to government data. Predictions of a recession are being replaced by expectations for a “soft landing” among money managers interviewed by Vivien Lou Chen.
These market patterns, shared by Denise Chisholm, Fidelity’s director of quantitative market strategy, shared with Jamie Chisholm (no relation) supply the notion that the rally in technology stocks may continue.
Then again, consumer confidence surveys provide a warning about the stock market’s health, according to Mark Hulbert.
Market Extra: Why U.S. stocks and bonds stumbled on talk of a Bank of Japan policy tweak
Breaking down the stock-market rally
These broad indexes have fared well, based on three-year total returns, despite the broad declines in 2022.
FactSetThe sectors that suffered the worst during the 2022 stock-market rout have been leading the 2023 recovery. Here’s a roundup of performance for the 11 sectors of the S&P 500 with dividends reinvested through July 27, with broad indexes at the bottom:
| Sector or index | 2023 return | 2022 return | Return since end of 2021 | Forward P/E | Forward P/E – Dec. 30, 2022 | Forward P/E – Dec. 31, 2021 |
| Information Technology | 44.3% | -28.2% | 3.6% | 27.3 | 20.0 | 28.2 |
| Communication Services | 42.5% | -39.9% | -14.4% | 17.2 | 14.4 | 21.0 |
| Consumer Discretionary | 33.1% | -37.0% | -16.2% | 27.1 | 21.5 | 34.2 |
| Industrials | 12.4% | -5.5% | 6.3% | 19.1 | 18.4 | 21.3 |
| Materials | 10.0% | -12.3% | -3.5% | 18.3 | 15.7 | 16.6 |
| Real Estate | 4.6% | -26.1% | -22.7% | 17.1 | 16.9 | 24.7 |
| Financials | 3.7% | -10.5% | -7.3% | 13.8 | 12.9 | 16.1 |
| Consumer Staples | 2.9% | -0.6% | 2.3% | 20.3 | 20.6 | 21.4 |
| Healthcare | 0.0% | -2.0% | -1.9% | 18.0 | 17.7 | 17.2 |
| Energy | -0.7% | 65.7% | 64.6% | 11.8 | 9.8 | 11.1 |
| Utilities | -3.2% | 1.6% | -1.7% | 17.3 | 18.7 | 20.4 |
| S&P 500 SPX | 19.3% | -18.1% | -2.3% | 19.5 | 16.8 | 21.5 |
| Dow Jones Industrial Average DJIA | 7.7% | -6.9% | 0.3% | 17.8 | 16.6 | 18.9 |
| Nasdaq Composite Index COMP | 34.9% | -32.5% | -9.0% | 27.7 | 22.6 | 32.0 |
| Nasdaq-100 Index NDX | 42.0% | -32.4% | -4.0% | 27.0 | 20.9 | 30.4 |
| Source: FactSet | ||||||
Notes about the sector and index data:
- The S&P 500 SPX is up 19.3% this year, but it is still down slightly from the end of 2021. Its forward price-to-earnings ratio has risen considerably in 2023, but also is lower than it was at the end of 2021.
- The S&P 500 information technology sector has led the market this year with a 44% gain, but it is still up only slightly from the end of 2021. Its forward P/E is including closer to where it was at that time.
- The communications services sector includes tech companies that have been major contributors to this year’s rally, since the S&P 500, Nasdaq Composite Index COMP and Nasdaq-100 Index NDX are all weighted by market capitalization. The largest names in this sector are Meta Platforms Inc. META and Alphabet Inc. GOOGL GOOG, which make up 5.6% of the SPR S&P 500 ETF Trust SPY, which aims to track the benchmark index by matching its weighting. Shares of Meta are up 159% this year, following a 64% decline in 2022. Even after this rally, the stock is still down 7% from the end of 2021. Alphabet’s Class A shares have risen 47% this year, after a 39% tumble last year. The stock is down 11% from the end of 2021.
Big tech, earnings and the Ratings Game
Shares of Meta
Justin Sullivan/Getty ImagesMeta, Microsoft Corp. MSFT, Alphabet and Intel Corp. INTC all announced quarterly results this week. Here is coverage of how analysts and investors reacted to the news, from The Ratings Game column:
- Meta’s dramatic turnaround continues. Why bulls say the stock surge isn’t done yet.
- Intel sees a huge AI opportunity — but its clock is ticking
- Intel stock rallies after earnings show AI data-center beat, strong PC sales
- Alphabet earnings remind Wall Street of Google’s AI prowess
- Shares of Snowflake, Datadog decline as Microsoft’s cloud commentary fails to impress
- Nvidia gets more good news from Big Tech, even as AI spending ‘may not lift all boats’
- Chip-equipment suppliers rally after Lam says AI servers will drive growth
- KLA Corp. stock adds to regular-session rally on earnings beat, outlook
RTX’s engine problems and how they might affect other companies
On Tuesday, RTX Corp. RTX, formerly known as Raytheon, announced that some aircraft engines made by its Pratt & Whitney unit would need to be removed from service for inspection, because of what appears to be a long-term manufacturing problem.
Here is a list of U.S. airlines expected to be disrupted as RTX works through the inspections of the affected engines, which are used in part of the Airbus SE AIR A320neo family of narrow-body airliners.
Other coverage of aerospace and airlines:
- Boeing’s ‘worst’ is past, and there’s plenty of demand
- U.S. durable goods orders climb 4.7% led by Boeing contracts
- Boeing’s stock leaps 5% after company’s big revenue and free-cash-flow beats
- American Airlines Group’s ‘modest’ outlook dings stock, United’s stock shines
- Southwest Airlines’ stock slides more than 8% as airline’s revenue has not recovered to prepandemic levels
The next hot housing market
It isn’t easy to find a listed house with a pool, or any home for sale, in this market.
Joe Raedle/Getty ImagesThe next active housing market in the U.S. might be in the Midwest, and Aarthi Swaminathan explains why.
U.S. pending home sales rose slightly during June, according to the National Association of Realtors, whose chief economist Lawrence Yun said: “the housing recession is over.”
That may be a surprise to people looking to buy houses in a market filled with homeowners who are content to stick with their low-rate mortgage loans rather than sell and face rates of 7% or higher.
This is what it might take to encourage people to put more homes on the market.
Chances are someone you know can benefit from this detailed advice
If you are running a human-resources department or in charge of renting out a large number of apartments, you might use broad methods to screen out potential candidates. You might exclude anyone with a criminal record, no matter what the crime may have been or how long ago it took place. An estimated 78 million people in the U.S. have criminal records, and they can face great difficulty finding any employment or rental housing.
Emma Ockerman looks into this problem and provides clear steps that can be taken by affected people looking for jobs or places to live and even how they might remove items from their public records.
Help with retirement planning
Quentin Fottrell — The Moneyist — helps a woman who is 61 and single and is having difficulty earning a living and planning for retirement.
More from The Moneyist: After our mother died, my sister went to nursing school. She asked me to cosign her $11,000 student loan. What do I tell her?
What’s going on with Tupperware?
Good products from a troubled company.
Scott Olson/Getty ImagesTupperware Brands Corp. TUP provided dire warnings to investors in April of accounting problems, a potential liquidity shortage and even “doubts regarding its ability to continue as a going concern.”
But the company’s stock soared 343% from the close on July 20 through July 27. James Rogers looks into the action to find out what traders are thinking.
This new fund is designed to gain from a long-term demographic trend
The Gabelli Financial Services Opportunity ETF GABF has been a stellar performer since it was established in May 2022. In an interview, its portfolio manager Macrae Sykes explained how it is positioned to take best advantage of the aging of the U.S. population by focusing on financial services companies that are becoming more profitable as they focus on managing clients’ money.
What to stream in the coming month
Quincy Isaiah, center, stars as Magic Johnson in Season 2 of HBO’s “Winning Time: The Rise of the Lakers Dynasty.”
HBOMike Murphy makes life easier for TV viewers, by summarizing what content will become available, and what will disappear, in August:
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