The U.S. stock market has done well coming into the end of the first half of 2023 with the large-cap benchmark index S&P 500 up more than 13% so far this year.
If history is any indication, investors may have reason to be even more optimistic about the next six months, according to Thomas Lee, founder of Fundstrat Global Advisors. The S&P 500 lost around 20 points, or 0.4%, to end near 4,329 on Monday. On Friday, it ended its five-week winning streak and booked its largest weekly decline since the collapse of Silicon Valley Bank in March, suggesting a three-month rally may be due for at least a pause.
The recovery of the U.S. stock market this year has been led by megacap technology stocks as volatility in the banking-sector in March ignited a rush into Big Tech shares to the extent that they were seen as a safe-haven trade. The tech outperformance was extended to the second quarter after the craze around artificial intelligence, expectations of the Fed pausing its rate rises, and a resolution to the debt-ceiling deal in Congress continue driving bullish sentiment on tech shares.
“The recovery in FAANG stock prices is evident of this. That is, how much more quickly these stocks are recovering key price levels,” said Lee. FAANG is an acronym used to refer to a handful of megacap tech stocks, including Facebook parent Meta Platforms Inc. META , Apple Inc. AAPL , Amazon.com Inc. AMZN , Netflix Inc. NFLX and Google parent Alphabet Inc. GOOG GOOGL . It can also be used to refer to megacap tech shares more broadly.