Only eight out of 215 trading days in 2023 have played a significant role in determining the stock market’s direction, according to a report from DataTrek, a research firm. This analysis highlights four main drivers behind the market’s movements: Big Tech earnings, Federal Reserve policy, long-term interest rates, and market concern about avoiding a recession.
The report noted that the stock market was largely influenced by the performance of Big Tech companies this year. Notably, strong earnings reports from major tech firms such as Netflix, Facebook’s parent company Meta, and Apple led to significant rallies in the stock market on specific days. These companies, which DataTrek refers to as the “Magnificent Seven”, have been key drivers in shaping market performance.
Additionally, changes in long-term interest rates and Federal Reserve policy have also played a critical role in driving the stock market’s movements. Hints of declining bond yields and the Fed’s decision to pause on interest rates have provided a much-needed boost to stock markets on multiple occasions throughout the year, leading to significant rallies.
Moreover, the market’s reaction to fears of a potential recession has also dictated stock market movements, particularly after the December jobs report showed slower-than-expected wage inflation. This led to hopes that the Fed would ease up on rates, resulting in a surge in stock prices.
Overall, DataTrek’s analysis underscores the fact that just a few key days have had a substantial impact on the market’s trajectory in 2023, with these four major factors at the forefront of market behavior. These findings suggest that understanding these key themes and events is critical for investors seeking to navigate the complexities of the stock market.
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