Wrapping up a Winning Half-Year: Equity Markets End on a High Note


Simpler Trading Team

Jun 30th 2023  .  4 min read

Markets Kick off Final Day of First Half in Full Swing

The market opened with a bullish bias as we wrapped up the first half of the year. The momentum from the overnight market, driven by slightly better than expected inflation data and robust GDP figures, spilled over into the morning session. A positive buzz permeated the futures market as investors anticipated a favorable day ahead.

The Market Dance: Gainers, Losers, and the In-Between

Navigating the market terrain was like piecing together a complex jigsaw puzzle, as performance seemed to diverge sector by sector. Riding high, tech, and consumer discretionary sectors took the lead, contributing a significant push to the overall market dynamics. Specifically, the information technology sector saw an uplift of 1.9%, with consumer discretionary following closely behind at 1.6%. The bullishness of these sectors surpassed even the S&P 500 which rose by a commendable 1.3%.

However, it was not all sunshine and rainbows for the real estate sector. Against the upward market current, the real estate sector went against the flow, posting a modest decline of 0.7%. Despite this divergence, the day’s trading proved favorable for those bullish at heart, as the overall market demonstrated an upward trend, underpinned by a resilient performance in the stock market.

Under the microscope, S&P 500 constituents Carnival (CCL 18.74, +1.58, +9.21%), Enphase Energy (ENPH 168.28, +9.51, +5.99%), and GE HealthCare (GEHC 80.94, +2.26, +2.87%) emerged at the front of the pack. Carnival cruised higher on the wave of a Jefferies upgrade, while Enphase Energy capitalized on an upgrade from B. Riley Securities. On the other side of the spectrum, Georgia-based household product firm Newell Brands (NWL 8.63, -0.33, -3.68%) was feeling the heat as the day’s top underperformer.

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Earnings Landscape: Amidst Market Gains, Nike Stumbles

In the arena of earnings, it was a mixed bag. The day’s notable standout was athletic apparel and equipment giant, Nike (NKE 110.22, -3.15, -2.78%), which staggered against the overall market uptrend. Despite expectations of a positive earnings report, the apparel company fell by more than 2% following a weaker-than-anticipated quarterly profit announcement. This result, while unexpected, served as a crucial reminder that even amidst broad market advances, individual earnings results can still go against the grain.

Economic Indicators Signal Resilience Amidst Softening

The economic waters were not without their ripples, but key data seemed to point towards a continued resilience in the U.S. economy. Despite potential headwinds, Thursday’s revised upward U.S. GDP growth data for the first quarter underscored this strength. The first quarter saw an annualized economic growth of 2.0%, up from the prior reading of 1.3%, driven largely by a robust consumption figure. The number cruised past the growth expectation of 3.8%, achieving an impressive 4.2% annualized growth.

Looking forward to the second quarter, predictions remained sanguine with the Fed’s GDP-Now tracker pointing towards a healthy growth rate of 1.8%. While above trend levels, this did not signal an economic downturn. However, leading indicators hinted at potential softening in the economy ahead, including the inverted yield curve and soft ISM manufacturing and services indexes. Despite these concerns, the forecast did not foresee a deep or prolonged contraction. Instead, it anticipated a potential softening sometime in the second half of the year, with markets likely looking past this softness towards a more sustainable period of recovery.

Market Close

The first half of the year wrapped up on a jubilant note for equity markets. The Dow Jones closed at 34,467.35, posting a gain of 291.34 points, or 0.85%, just before 4 PM. The broader S&P 500 index followed suit, jumping 54.68 points or 1.24% to close at 4,458.43. The tech-heavy Nasdaq ended at 13,816.67, boasting a significant 203.52 point, or 1.50%, surge. Meanwhile, the Small Cap 2000, reflective of smaller public companies, showcased a modest uptick of 0.38%, closing at 1,900.25. The S&P 500 VIX, the market’s fear gauge, demonstrated investor confidence by dropping 1.99% to end at 12.96. All indices pointed towards a spirited end to the first half of the year, signaling an optimistic outlook.