Investors shunned value stocks and rotated back into growth stocks, weighing on the Dow’s returns.Īrtificial intelligence was a key investment theme that propelled tech stocks in the year’s first half. The blue-chip Dow Jones Industrial Average lagged significantly in the first half, gaining 3.8%.The tech-heavy Nasdaq left the S&P 500 in the dust, gaining more than 30% heading into the rest of the year. Large-cap tech stocks led the S&P 500 to a 14% gain in the first half of 2023.The Technology Select Sector SPDR Fund (XLK) gained more than 21% in the first quarter and continued with another gain in the second quarter, for a total gain of 40% in the year’s first half.But much of those gains were concentrated in the technology sector. The S&P 500 gained 5% in the first quarter of 2023. But recession risk remains elevated, and some market experts urge investors to take a cautious approach to a red-hot market in the second half of the year. Technology stocks and growth stocks have outperformed in 2023, and investors are increasingly optimistic the Fed can navigate a soft landing for the U.S. banks have seemingly stabilized following a regional banking crisis and the Federal Reserve has made sufficient progress in stabilizing prices to pause its interest rate hikes in June. Inflation has trended steadily lower, economic growth has been stronger than feared, U.S. Several key issues that weighed on investors’ appetites for stocks and other risk assets in 2022 have subsided in recent months. The S&P 500 could be on track for its best annual performance since 2019. The stock market is entering the second half of 2023 with positive momentum, which historically bodes well for returns for the rest of the year. Tight credit markets, elevated inflation and interest rates remain risks.Analysts are optimistic about the outlook for stock prices.The technology sector led the stock market to impressive gains in the first half of 2023.
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