U.S. Stock Market Posts Strong First Quarter, Nasdaq Soars in Best Quarterly Gain Since 2020

The U.S. stock market has experienced a bullish run in the first quarter of 2023, with the S&P 500 index on track to notch its third straight week of gains, a feat not seen since late August 2022. Despite a mixed performance in the bond market, with the benchmark 10-year Treasury yield remaining flat at 3.56% and the two-year yield hovering around 4.10%, the tech-heavy Nasdaq made a remarkable resurgence, soaring nearly 17% in its best quarterly gain since the fourth quarter of 2020.[0] This comes after a tough 2022 for tech stocks, as investors sought out less risky avenues to ride out turbulence from the Federal Reserve’s interest rate hike campaign.[0]

The Dow Jones also rose about 0.4%, while unemployment claims rose by 7,000 from the previous week to 198,000, showing a slightly weaker labor market than expectations of 196,000.[1] Charles Schwab Corp. shares fell about 5% on Morgan Stanley’s downgrade, while Intel Corp rose 1.7% as investors welcomed the company’s AI presentation, and after Raymond James and Deutsche Bank analysts raised the price target.[1] Micron Technology also rose more than 2% in pre-market trading after forecasting Q3 sales of $3.90 billion, better than the consensus of $3.75 billion.[2]

Despite a murky outlook for Federal Reserve policy, stocks rose on Wednesday, resuming a recent upswing after a dip the previous day.[3] The renewed buying in tech stocks helped lift the major averages following a mild risk-off preference over the prior couple of sessions.[4] The final-fourth quarter GDP has been revised lower from initial estimates of 2.7 to 2.6%, according to the U.S. Bureau of Economic Analysis, while pending home sales rose 0.8% in February despite rising interest rates, according to the National Association of Realtors.[1]

As it stands, interest rate traders assign a roughly 50-50 probability for either a pause or 0.25% rate hike at the next Fed meeting, according to CME Group.[5] Expectations on the central bank’s move at its May meeting continue to fluctuate, with markets now pricing in a ~50% chance of no hike at the May meeting, down from nearly 60% on Wednesday.[6] It is deemed crucial that the Fed will limit the highest interest rate to 5.00% to 5.25%, as perceived by the markets.[6]

Gold futures fell 0.1% to $1,995.50/oz, while EUR/USD traded 0.2% lower at 1.0876.[7] The heavyweight Technology sector also got a boost from JD.com, with the U.S.-listed shares of the Chinese e-commerce giant jumping after it announced plans to separately list two of its units on the Hong Kong Stock Exchange.[6] U.S.-listed Chinese technology stocks also climbed after two subsidiaries of JD.com filed for Hong Kong initial public offerings.[8] As a result, JD.com is up more than 6% to lead gainers in the Nasdaq 100, while PDD Holdings is up more than 5%, and Alibaba Group Holding is up more than 2%.[8]

0. “Stocks bounced back this quarter, but it’s too early to celebrate” CNN, 31 Mar. 2023, https://www.cnn.com/2023/03/31/business/stocks-q1/index.html

1. “S&P 500 Fully Recovers Bank Turmoil Losses, Nasdaq 100 Extends Further As Rising Jobless Claims Keep Rate …” Benzinga, 28 Mar. 2023, https://www.benzinga.com/news/earnings/23/03/31577162/us-stocks-eye-strong-q1-finish-as-futures-point-to-higher-open-jobless-claims-gdp-data-in-focus

2. “Dow Jones Dips As Alibaba Flies; 3 New Cathie Wood Buys Trade Mixed; Micron Earnings Miss” Investor’s Business Daily, 28 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-falls-as-yields-rise-coinbase-stock-falls-again-as-cathie-wood-buys-more-shares-apple-stock-alibaba-stock-soars

3. “Stocks rise as first quarter wraps up: Stock market news today” Yahoo Finance, 31 Mar. 2023, https://finance.yahoo.com/stocks-rise-as-first-quarter-wraps-up-stock-market-news-today-125051425.html

4. “Dow, S&P 500, Nasdaq rally as Micron boosts tech (SP500)” Seeking Alpha, 29 Mar. 2023, https://seekingalpha.com/news/3952433-dow-sp-500-nasdaq-rally-as-micron-boosts-tech

5. “On a Roll: Late-Quarter Rally Gains Steam As Banking Fears Dissipate, But Watch for Fed Speakers” The Ticker Tape, 30 Mar. 2023, https://tickertape.tdameritrade.com/market-news/on-a-roll-late-quarter-rally-gains-steam-as-banking-fears-dissipate-but-watch-for-fed-speakers-19436

6. “Nasdaq, S&P 500, Dow end higher for second straight day, buoyed by tech stocks (SP500)” Seeking Alpha, 30 Mar. 2023, https://seekingalpha.com/news/3952769-sp500-nasdaq-dow-jones-stock-market-tech-stocks-fed

7. “Dow futures rise 75 pts; Fed’s main inflation gauge in focus By Investing.com” Investing.com, 31 Mar. 2023, https://www.investing.com/news/stock-market-news/dow-futures-rise-75-pts-feds-main-inflation-gauge-in-focus-3046179

8. “Strength in Chipmakers Pushes Tech Stocks and the Overall Market Higher” Barchart, 30 Mar. 2023, https://www.barchart.com/story/news/15556332/strength-in-chipmakers-pushes-tech-stocks-and-the-overall-market-higher