US Stock Market: Top gainers and losers of last month

S&P 500 Index fell by 2.6% in February 2023, failing to maintain the market’s positive momentum, when the index rallied 6.2% in January. The Information technology sector was the only one among 11 equity sectors to post a positive result in February 2023, and the S&P 500 closed the month down by 17.2% from its historic peak reached on January 03, 2022.

The NASDAQ-100 Index closed down by 0.4% and NYSE FANG+ Index closed up by 3.8%. Lastly, the attractiveness of the U.S. dollar has again become attractive due to surge in inflation and expectation of rate hike. This has resulted in appreciation of US dollar by 1.2% during the month of February 2023.

For the month of February 2023, in INR terms, NYSE FANG+ Index closed upward by 5.0% in INR in which appreciation of dollar against the rupees aided some of the return from the index. The index performance was led by Meta, Nvidia and Tesla.

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S&P 500 Top 50 Index, in INR terms, closed down by 0.3% in which appreciation of dollar against the rupees aided some of the return from the index. The Information Technology, Materials and Information Technology were top performing sectors whereas healthcare, energy and communication services sectors were laggards. Nvidia, Meta and Tesla were top contributors. Home Depot, Eli Lilly, Alphabet and Amazon were the top looser in the index.

The market still see inflation set to grind lower, but the process is likely to be bumpy and take time. Despite some directional improvement over the past couple of quarters, prices are still growing well-above the Fed’s 2% target, and the tight labour market suggests that there are still inflationary pressures that could forestall a full return to 2% inflation.

Despite the Fed’s historically rapid tightening cycle, a tight jobs market combined with inflation that is now easing is providing a tailwind for consumers. As far as fed fund rate is concerned than it looks likely that the federal funds target range to peak at 5.00%-5.25% in May 2023 and remain there through the end of the year.

It will take softer economic data for the FOMC to feel assured that inflation is firmly moving toward the central bank’s 2% target, and until then, rates markets will be sensitive to upside surprises in the data like the ones that have occurred in recent month such as surge inflation, tight labour market etc.

(By Mirae Asset Management)