Topline
The Nasdaq Composite is on the brink of posting its strongest start to the year ever, as the flagship tech index shakes off a dreadful 2022 on the back of newfound excitement for the sector—a surge fueled partly by the rise of artificial intelligence.
It’s been a good year so far for tech bulls.
Key Facts
The Nasdaq has gained 30% year-to-date, outperforming the S&P 500’s 14% bounce and Dow Jones Industrial Average’s 2% gain.
With two days left, the Nasdaq is on track for by far its best January 1 to June 30 return since its inception in 1971, easily topping the prior record holder, 2019, when it gained 25.2%.
This year’s hot start comes after the index crashed 30% during the first half of 2022—its biggest first-half loss since 1974—as investors piled out of rate-sensitive tech stocks as the Federal Reserve began hiking interest rates.
Arguably the biggest factor behind the Nasdaq’s recent rally is Wall Street’s grand vision about what generative artificial intelligence could mean for sales growth for tech’s biggest names; chipmaker Nvidia and AI-exposed stalwarts Alphabet and Microsoft have each gained hundreds of billions in market value this year.
Crucial Quote
Even amidst the AI-driven “market euphoria,” there are still “underappreciated” aspects of the nascent technology which could be a “big driver” of future broad stock gains, the BlackRock Investment Institute wrote in a midyear outlook published Wednesday, naming AI as one of the five “mega forces” driving markets long-term.
Big Number
Nearly 14,000%. That’s how much the Nasdaq Composite has soared from its February 1971 launch price of 100. The S&P and Dow have gained 4,300% and 3,700% over the same period, respectively.
Surprising Fact
The Nasdaq has historically performed better over the second half of the year, gaining an average of 7.8% from July 1 to December 31 since 2000, compared to a 3.2% average rise during the first six months of the year. A 7.8% gain for the Nasdaq from its Wednesday level of 13,625 would send it to about 14,600, its highest level since last March.
Further Reading
Nasdaq, S&P 500 Set 2023 Highs (Forbes)
This Stock Market Indicator Is The Weakest It’s Ever Been—And Other Warning Signs Are Flaring (Forbes)
This was the worst first half for the market in 50 years and it’s all because of one thing — inflation (CNBC)
Source: https://www.forbes.com/sites/dereksaul/2023/06/28/nasdaq-set-for-best-first-half-in-its-52-year-history-amid-ai-fueled-market-euphoria/