Stocks and bonds posted gains last year, but the big rise in markets in the final two months of 2023 wasn’t enough to leave the technology-heavy Nasdaq Composite up from the end of 2021.
“Following the strong year in 2023, the S&P 500 is now +3% in two years, but the Nasdaq is still -2% since the end of 2021 despite the big gain,” wrote BofA Global Research equity and quant strategists in a BofA note Wednesday. The “Magnificent 7” is up 9% in two years, but Tesla Inc., Amazon.com Inc. and Google parent Alphabet Inc. “remain under water since 2021,” they said.
While equities and bonds in the U.S. rebounded last year from a bruising 2022, parts of the market that were particularly hard hit, such as the Nasdaq, are still recovering from their tumble.
Shares of Tesla
TSLA,
-4.01%
are down 29.5% in the two years through 2023, while Amazon
AMZN,
-0.97%
fell 8.9% and Alphabet
GOOGL,
+0.54%
lost 3.6% over the same period, FactSet data show.
The Magnificent 7, a group of megacap stocks also referred to as Big Tech, propelled the S&P 500’s gains in 2023, but the index still had small gains since the end of 2021. The high-profile group of seven Big Tech stocks also includes Apple Inc.
AAPL,
-0.75%,
Microsoft Corp.
MSFT,
-0.07%,
Nvidia Corp.
NVDA,
-1.24%
and Facebook parent Meta Platforms Inc.
META,
-0.53%
On a total return basis in the two years through 2023, the S&P 500 is up 3.4% while the Nasdaq Composite is down 2.4%, FactSet data show.
Meanwhile, Cathie Wood’s widely followed ARK Innovation ETF, a fund that targets disruptive innovation as an investment theme, staged a huge rally in 2023, surpassing the Nasdaq-100 index’s gains. But the ETF is attempting to climb from deep losses accumulated after 2020.
Unlike the Nasdaq-100 index, a gauge of non-financial stocks that is heavily weighted in technology and aims to reflect innovation and growth, the ARK Innovation ETF dropped in 2021 and was rebounding last year from back-to-back annual losses.
See: Cathie Wood’s ARK Innovation ETF stages massive quarterly rally as it climbs in 2023 after big losses
Also read: Cathie Wood’s ARK Innovation ETF in ‘breakout mode’ after triggering bullish pattern
Bonds gain in 2023, but still bruised
As for the fixed-income market’s recovery, investment-grade corporate bonds gained 8% in 2023 “but are still down 8% in two years,” the BofA strategists said.
And although long-term Treasurys “eked out” gains in 2023, they remained “the worst-performing asset class in two years,” the strategists wrote, pointing to a 26% loss.
The iShares 20+ Year Treasury Bond ETF
TLT
saw a total return of 2.8% last year, but the fund was still down a total of more than 29% since the end of 2021, according to FactSet data.
Meanwhile, the U.S. stock market was declining early afternoon Wednesday, with the S&P 500
SPX,
Dow Jones Industrial Average
DJIA
and Nasdaq Composite
COMP
all down, FactSet data show, at last check. Treasury yields were little changed, with the 10-year rate
BX:TMUBMUSD10Y
at around 3.94% in early afternoon trading Wednesday.
Read: ‘One of the most aggressive rallies’ in markets in decades flipped bond losses into 2023 gains, Deutsche Bank chart shows
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