Wall Street
US stocks achieved strong annual gains at the end of 2023, erasing the losses incurred by benchmark indices last year, despite the challenges of rising interest rates in the United States and an inflation rate higher than the US Federal Reserve’s target.
In this regard, we find that the S&P 500 index achieved annual gains of 24.32%, meaning the benchmark index rose by 930 points. Also, the annual gains of the Nasdaq Composite Index amounted to approximately 53.8%, or 5886.17 points. To end last year at the level of 16825.95 points.
At the same time, the profits of the Dow Jones Industrial Average during the year 2023 were estimated at approximately 13.70% to record 37,688.55 points, meaning an increase of approximately 4,548 points.
What is behind the strong annual earnings of US stock indices?
The recovery in risk appetite in US stock markets contributed to enhancing the annual gains in the performance of US stocks during the ending year. The VIX volatility index declined by 42.55%. This reflects the recovery of investors’ appetite for the US stock market and the decline of trading fears in the market.
This strong recovery in risk appetite came despite the challenges of high interest rates and fears of a slowdown in economic growth in the United States due to tightening policy. Along with the banking crisis that the country witnessed in early 2023, represented by the collapse of three American banks.
Several factors supported the strong recovery in risk appetite in the US stock market. The most prominent of them can be addressed as follows:
First: Global stock markets are optimistic about the end of the tightening approach
The US stock market benefited from rising investor expectations about the US Federal Reserve ending its cycle of raising interest rates and starting to cut interest rates early in the new year, as a possible result of the slowdown in inflation in the United States during recent months, and the US Federal Reserve’s desire to abandon unnecessary excessive tightening. It has negative repercussions on US economic growth, which prompted markets to price in the US Federal Reserve to significantly reduce interest rates starting next March.
Second: The strong rise of technology sector stocks listed on the US stock market
The technology sector led most of the annual profits achieved by US stock indices, as attention turned to the shares of companies operating in the semiconductor industry and artificial intelligence in general. For example, NVIDIA stock achieved annual profits of more than 238%, and the technology company AMD recorded annual gains amounting to 127.6%. %, and Apple’s profits during the ending year were estimated at approximately 48%.
This coincided with the electric car manufacturer Tesla recording annual profits of about 101%, in addition to Amazon’s stock rising by 80.88%. Also, Alphabet’s share profits reached more than 58%.
2024-01-01 15:57:10
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