Investors have had a slew of downbeat headlines to kick off 2023.
Eye-popping layoff news from tech stalwarts Amazon, Microsoft, Salesforce and 3M. Chip big Intel reported one other robust outlook amid a major slowdown in PC demand. Ford and Tesla slashing costs on EVs because the economic system has cooled. Signs that inflation continues to gradual — however not at such a fast tempo as to recommend charge cuts from the Federal Reserve later this 12 months. Earnings are meh.
And but shares are off to a surprisingly solid start to the year.
As of this writing, the Nasdaq Composite has posted an almost 9% acquire to date in 2023, per Yahoo Finance knowledge. The S&P 500 and Dow Jones Industrial Average have clocked in with 4.65% and 1.7% advances, respectively.
It’s unclear if January will likely be nearly as good because it will get for shares this 12 months or the occasion will proceed — in any case, the motion has been attention-grabbing to observe. Here are a number of attention-grabbing stats from 2023 served up by astute market strategist Keith Lerner at Truist:
1. Investors are feeling the forgotten.
The 50 worst-performing shares of 2022 are up a mean of 20.1% to date this 12 months, in line with Lerner’s analysis. The 50 best-performing shares from final 12 months, in the meantime, are up a mean of only one.9%.
“We view this as almost definitely a short-term reversion of oversold shares versus new market management or a basic shift,” Lerner says.
2. Investors pump up PEs.
Analyst earnings estimates for the S&P 500 have ticked right down to an 11-month low, Lerner famous. So, the advance in shares has been fueled by rising price-to-earnings multiples — doubtless on the hope the Fed halts its charge hikes mid-year.
The S&P 500’s ahead PE ratio has jumped again to 17.9 instances, close to the height degree of 18.0x-18.5x it traded to over the previous decade exterior of the pandemic highs.
“While that is typical through the early phases of a brand new bull market, since costs are likely to advance effectively earlier than earnings and the economic system flip up, we stay skeptical,” Lerner wrote. “Our view is traders, as mirrored in rising valuations, are putting too excessive of a likelihood on a delicate financial touchdown and leaving little margin for error.”
3. ‘indiscriminate shopping for’
Going again to the beforehand out-of-favor shares…
Lerner notes that “remarkably,” all 50 of final 12 months’s worst performing shares are up in 2023.
The urge for food to purchase these names “indiscriminate shopping for”, Lerner says.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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