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Zacks Investment Ideas feature highlights: S&P 500 Index ETF, Nasdaq 100 ETF, Microsoft and Nvidia

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For Immediate Release

Chicago, IL – October 16, 2023 – Today, Zacks Investment Ideas feature highlights S&P 500 Index ETF (SPY - Free Report) , Nasdaq 100 ETF (QQQ - Free Report) , Microsoft (MSFT - Free Report) and Nvidia (NVDA - Free Report) .

Bull Market Turns One: 5 Takeaways

To Achieve Stock Market Success, Learn from the Past to Take Advantage of the Future

On October 13th 2022, the nearly one-year-long equity bear market finally ended. Year-to-date, the S&P 500 Index ETF is up 13.65%, while the tech-heavy Nasdaq 100 ETF is up a robust 40%. Despite the massive turnaround and the clear character change in equities, many of Wall Street’s most esteemed analysts were neutral on the stocks, or worse, bearish. Regardless of whether you have cashed in on the bull market or missed it, studying and learning from stock market history is crucial for several reasons, including:

Patterns & Trends: Stock market history reveals patterns and trends that repeat over time. Investors can identify and learn from repeatable patterns to make more informed decisions in the future.

Market Psychology: Historical events show how market psychology can drive prices.

Informed Decision Making: Informed investors equip themselves with historical data that can aid them in reducing impulsive and emotional trading, which often leads to stock market losses.

Below are 5 of the most critical lessons from the 2023 equity market:

Bear Markets Bottom on Bad News

Though it may seem counterintuitive to amateur investors, corrective markets tend to bottom when there is panic selling on poor news. That’s precisely what occurred in 2023. The Consumer Price Index (CPI) reading shot to 40-year highs on the day equities bottomed. Equity markets are similar to poor poker players in that they often give a “tell” or a subtle clue that things have changed. The day CPI hit 40-year highs, stocks opened the session deep in the red but closed the session higher by more than 2%. The best bottoms occur when “bad” news becomes good news.

Stocks Discount Future Earnings

As 2022 concluded, many Wall Street gurus were discussing the potential for a recession (a significant decline in economic activity across the economy, characterized by a decrease in GDP, employment, and overall trade, usually lasting for a prolonged period). They failed to understand that the bullish price action in stocks was a sign that earnings were troughing. Stocks almost always turn before earnings.

The AI Revolution Is For Real

Whenever a new technology emerges, investors can easily get lost in the hype and have unrealistic expectations. 2023 will be known as the year OpenAI and Microsoft’s ChatGPT catapulted AI into the mainstream. But how do investors separate revolutionary technology from hype? Earnings. Nvidia, which makes the top chips used in AI technology, will grow revenues to more than $50 billion in 2024. For context, NVDA was already the far-and-away chip leader in 2020, when the company earned just $10 billion in revenue.

Bull Markets Climb a Wall of Worry

The 2023 bull market is proof that bull markets climb a “wall of worry”. Equities have rallied in the face of recession fears, rising interest rates, stubborn inflation, and geopolitical upheaval.

Extreme Sentiment Readings Mark Turning Points

“If everyone is thinking the same, someone isn’t thinking.”The CNN Fear & Greed Index flashed “extreme fear” readings three times in the past year: October 2022, March 2023, and early October. Each time fear hit a fever pitch, equities established a significant bottom.

Conclusion

In 2023, the stock market is witnessing a significant turnaround and is defying Wall Street analysts’ bearish expectations. The lessons that investors can learn underscore the value of historical analysis and understanding market psychology for successful stock market navigation.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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