The S&P 500 extended its winning streak to five months in July, bringing its year-to-date total return to 20.5%. The S&P 500 has now recovered most of its losses from 2022 and is currently trading less than 5% below its all-time closing high set in January 2022.

One of the factors contributing to Technology’s strong 2023 return is excitement around artificial intelligence, or AI. AI, which refers to the ability of a digital computer or a machine to perform tasks commonly associated with human intelligence, is being hailed as the next big technological advance.

The US economy grew at a +1.1% annual rate in the first quarter of 2023, marking a decline from the +2.6% growth rate in the fourth quarter of 2022.

Based on January economic data and fourth-quarter data revisions, the U.S. economy appears to be in a stronger position than economists forecast. Job growth was robust in January as U.S. employers added 517,000 jobs, well above the average.

Looking ahead to 2023, the U.S. economy is forecasted to slow as the cumulative effect of higher interest rates takes hold.

Stocks traded higher for a second consecutive month after another encouraging inflation report. Investors cheered the report as fresh evidence that price pressures are easing after a period of high inflation.

Stock markets remained volatile during October, once again changing direction as investors shifted their views. After declining -9.2% during September, the S&P 500 gained +8.1% during October.

Investor hopes for a Fed pivot were one of the primary catalysts that propelled the stock market higher during July and August. Chair Powell’s recent speech at Jackson Hole dashed those hopes.

Why the change in attitude? Multiple catalysts could be causing the turnaround, one of which includes investor sentiment being too negative entering July.

Low-interest rates and bond purchases stabilized the U.S. economy during the Covid pandemic, but removing the two pandemic-era monetary policies is proving to be enormously disruptive.

Recent economic data indicates the COVID-19 recovery is moderating.