The first half of the year is almost over and the stock is up almost 15%.
Why it's important: The rally, which some believe is the initial phase of a new bull market, reflects relief that inflation has eased without a recession, as well as a dash of speculative spice in the form of artificial intelligence.
In the numbers:
The S&P 500 rose 14.5%.
The Nasdaq Composite technology index rose 29.9%.
The small-cap Russell 2000 index - driven by expectations of the US economy in the relatively short term - rose 6.8%.
Context: After a terrible year in 2022 - the S&P's 19.4% decline was the worst since 2008 - investors were entering this year pretty damn bearish. And with good reason...
Inflation was still above 6%.
More Fed rate hikes were expected.
As a result, almost everyone was predicting a recession - and brutal corporate profits.
Moreover, there was a non-negligible risk that the United States would default on its debts, triggering a financial crisis.
Yes, but: Things worked out fine. Inflation is now at 4%, and the Fed has breathed a sigh of relief when it comes to raising rates. The debt ceiling deal has been struck and the US economy is much stronger than many expected. Corporate profits have been okay.
Even the worst banking panic since the financial crisis, which erupted in March with the collapse of Silicon Valley Bank, did not weigh on the market for long.
Be smart: There's an old aphorism on Wall Street that stocks like to climb the "wall of worry."
Translated, "Risk aversion": stocks tend to rise when investors start out as pessimists, but gradually gain confidence when the ugly scenarios they feared don't materialize.
That's essentially what happened in 2023.
What's next: Some believe the continuation of the rally hinges on whether the remaining bears can gradually turn into bulls.
Goldman Sachs analysts, for their part, say economic news - such as Thursday's better-than-expected GDP revision - will likely continue to come in rosy.
