“It’s hard to be a contrarian for very long these days because the consensus seems to change so quickly,” opined Ed Yardeni via LinkedIn last week.
We’ve certainly seen a shift in investors’ preferences during the first few weeks of this year. Despite widespread expectations that markets would move lower early in 2023, major U.S. stock indices have trended higher. Year-to-date through January 20, 2023:
The year-to-date gains reflected stock investors’ optimism about where the economy may be headed, reported Nicholas Jasinski of Barron’s.
“Stocks have embraced the concept of a soft landing so far in 2023…The communication-services and consumer-discretionary sectors of the S&P 500 are trouncing the market, each up at least 5% year to date. Defensive consumer-staples, utilities, and healthcare stocks, on the other hand, have declined more than 2%. If stock investors were worried about a recession, shares of companies that sell electricity, toilet paper, and [cereal] should be doing better than riskier firms in more discretionary areas. They’re not.”
That’s a significant change from last year when the communication services and consumer discretionary sectors were the worst performers in the S&P 500, and energy and utilities were the top performers.
It’s quite possible we will see another shift in investors’ expectations so be prepared for a bumpy ride.
Major U.S. stock indices delivered mixed performance last week. The S&P 500 and Dow moved lower over the five-day period, while the Nasdaq moved higher. Yields on most longer-dated U.S. Treasuries finished the week lower.
https://www.linkedin.com/pulse/pessimistic-consensus-edward-yardeni/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/01-23-23_LinkedIn_Pessimistic%20Consensus_1.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/01-23-23_Barrons%20Data_2.pdf)
https://www.barrons.com/articles/stock-market-dow-nasdaq-sp500-51674262537?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/01-23-23_Barrons_Stocks%20and%20Bonds%20are%20Sending%20Different%20Messages_3.pdf)
https://stories.wf.com/wp-content/uploads/2022/12/Wells-Fargo-Financial-Planning-Survey-Report.pdf (Page 2)
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