Topline
Friday is the last trading session of the summer, concluding a rather cool stretch for the stock market after an unseasonably warm start to the year.
Key Facts
From June 21 through Friday at 10:30 a.m. EDT, the Dow Jones Industrial Average inched up 0.5%, the S&P 500 declined 0.4% and the tech-heavy Nasdaq fell 1.3%.
After driving much of the market’s broad gains during 2023’s first half, big tech stocks’ extended slump was the biggest story this summer.
The “magnificent seven” tech behemoths—Apple (shares down 5%), Microsoft (down 4%), Alphabet (up 9%), Amazon (up 4%), Nvidia (down 4%), Tesla (down 2%) and Meta (up 8%)—have lost a combined $13 billion in market capitalization since June 21.
In a similar reversal of fortunes, energy stocks dominated this summer as crude oil prices shot up to 10-month highs while demand for gasoline remains strong: Four of the five best performers on the S&P during the period were oil companies Marathon Petroleum (shares up 41%), Valero (up 34%), Phillips 66 (up 31%) and Halliburton (up 29%), according to FactSet data.
Notable summer winners include Spectrum parent Charter Communications (up 37%), which enjoyed a bump following its high-profile showdown with Disney over carriage fees, regional bank Zions Bancorp (up 23%), which demonstrated resilience in its operations after the failure of its peers, and Warren Buffett’s Berkshire Hathaway (up 7%), which hit a new all-time high after reporting record quarterly operating profits.
Other warm weather losers include Pfizer (down 15%), Disney (down 7%) and Walgreens (down 31%), each of which slid to multiyear lows this summer thanks largely to their respective earnings slowdowns.
Surprising Fact
About a fifth of mutual funds have 40% or more of assets under management invested in the “magnificent seven,” according to Bank of America research. The S&P is the most concentrated in its five largest constituents by market cap ever, according to the bank, leading to concerns about the overall health of the market.
Key Background
The summer’s macroeconomic backdrop was a familiar story, with investors continuing to process what an extended period of elevated interest rates will mean for equities. Despite the cooler summer, all three indexes are up significantly year-to-date, paring much of 2022’s losses. Also driving market sentiments recently were the market debuts of Arm, Instacart and Klaviyo, three of the 10 largest U.S. initial public offerings of the last two years.
What To Watch For
What the fall and beginning of winter will bring for stocks. The fourth quarter is historically a bumper period for the market, with the S&P rising an average of 5% during the period since 1988.
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