So far in 2023, US stocks have turned the tide. The tech sector took the brunt of the 2022 stock market meltdown. The story so far for tech stocks is totally different. While banking stocks plummeted, it was technology equities that catapulted the S&P 500 and Nasdaq 100 into the bull market zone by May 2023. Both indices have risen nearly 20% since their lows in October.

The year-to-date (YTD) returns for the 3 leading US stock market indices are:

  • Dow 30: 2%
  • S&P 500: 11.5%
  • Nasdaq 100: 33%

June could see relatively more volatility as decisions around interest rate come up mid-month along with US inflation data that arrives a day earlier. What’s in store for the investors at the end of June 2023, remains to be seen. A lot of that will depend on US CPI data including the core-inflation numbers and the US Fed rate hike action on June 13-14.

A sticky inflation means aggressive action from the Fed and the recession worries will re-emerge. Dow index stocks have not participated in the rally so far while a handful of Nasdaq stocks have led the rally pushing their valuations higher.

Here’s how the US stocks performed for the first half of 2022.

June 2022 market performance

The US economy was producing significantly worse results a year ago. The headline inflation rate had unexpectedly increased to a record 40-year high of 8.6% in June 2022 (May data). The Fed had hiked its key policy rate by 75 basis points to 1.50-1.75%.

By the end of June 2022, the stocks had shed a lot of value. The majority of US market indexes were down between 20% and 35% from their 52-week highs. The S&P 500 had its worst first half (-20%) since 1970 and its second worst 1H since 1957. The Nasdaq 100 fell in five of the first six months of the year, marking both its worst first half (-30%) in 20 years (Q2 2002) and its worst quarter (-22% in Q2) since Q4 2008 (Lehman Bros.).

The Russell 2000 small-cap index posted its poorest one-year return (-23%) since its establishment in 1979. The Dow was the relative outperformer, falling 15% in the first half of 2022; nevertheless, June was its worst-performing month this year.