Stocks ended Monday lower following a lackluster rally last week. Investors may have jitters ahead of this week’s big Federal Reserve meeting, a deluge of earnings from top tech firms and the jobs report on Friday.
The stock market had a rough day on Wednesday, with the Dow Jones Industrial Average falling more than 260 points. The S&P 500 and Nasdaq Composite indices both slid 1.3% and 2%, respectively. Despite the sell-off, the market has still had a strong start to the year. Many of last year’s losers have led the way on Wall Street so far in January.
The communications sector has surged nearly 10%, making it the best performing market group so far in 2023. It was the worst-performing sector in 2022, plummeting 40%. This dramatic turnaround is largely due to the resurgence of big tech companies like Apple and Amazon, which have helped buoy the markets overall.
Several other media companies, old and new, have also enjoyed a resurgence this month. CBS owner Paramount has soared to an all-time high, with a market cap of over $13 billion. Disney (DIS) is up about 25%. Netflix (NFLX) has gained more than 20%. (So much for the death of streaming media?) Shares of Facebook and Instagram owner Meta Platforms are up more than 20%, as well.
The consumer discretionary sector has seen a rebound in 2020, after performing poorly in 2022. This sector includes many retailers and auto companies, which have seen a resurgence in stock prices. While this rebound is exciting, it is important to remember that these stocks are still risky and may not be a good investment for everyone.
Investors are buying into the hope that the Fed will continue to pull back on the size of its rate hikes. This comes after several historically large increases last year. Some investors are even hopeful that the Fed will pause later this year. This sentiment is that the economy could wind up heading for a so-called soft landing: a slowdown but not a full-blown recession.
The market rally has lifted consumer stocks. Amazon (AMZN) is up about 20% this year. Cruise line owners Carnival (CCL), Royal Caribbean (RCL) and Norwegian (NCLH) are among the top performers in the S&P 500. So are shares of casino companies Caesars (CZR), Wynn (WYNN), Las Vegas Sands (LVS) and MGM (MGM).