While skeptics watched from the sidelines, the stock market delivered an extraordinary performance in 2023, with the S&P 500 surging over 26%, the Nasdaq rocketing more than 43%, and the Dow hitting its first close above 38,000 in early 2024.
Key Takeaways
- The S&P 500 index achieved a total return of 26.29% in 2023, including dividends, marking one of its strongest years since 2019.
- The Dow Jones Industrial Average (DJIA) closed at 37,689.54 on December 29, 2023, with a yearly gain of 13.70%.
- NASDAQ Composite Index rose 43.42% in 2023, driven by tech sector rally, reaching 15,011.35 by year-end.
- Average daily trading volume on NYSE reached 1.2 billion shares in 2023.
- NASDAQ average daily volume hit 4.5 billion shares in 2023.
- Total US equity trading volume exceeded 1.5 trillion shares in 2023.
- S&P 500 forward P/E ratio stood at 20.5x as of end-2023.
- Average P/E for S&P 500 companies was 22.4x trailing twelve months end-2023.
- Tech sector average P/E reached 29.8x in 2023.
- 42% of US households owned stock directly or indirectly in 2022.
- Average age of US stock investor is 51 years as of 2023 survey.
- Women comprised 52% of Robinhood users by end-2023.
- US GDP growth of 2.5% in 2023 positively correlated with S&P 500 returns.
- Fed funds rate hikes from 0.25% to 5.25-5.50% in 2023 led to 10% market dip mid-year.
- Unemployment rate averaged 3.6% in 2023, near historic lows boosting equities.
The stock market surged in 2023, driven by strong tech gains and a resilient economy.
Company Valuations
- S&P 500 forward P/E ratio stood at 20.5x as of end-2023.
- Average P/E for S&P 500 companies was 22.4x trailing twelve months end-2023.
- Tech sector average P/E reached 29.8x in 2023.
- Financials sector P/E averaged 12.6x, lowest among S&P sectors in 2023.
- Nvidia (NVDA) P/E ratio surged to 70x forward earnings end-2023.
- Berkshire Hathaway (BRK.A) traded at 1.4x book value end-2023.
- Median P/S ratio for Russell 3000 was 2.1x end-2023.
- Consumer staples P/B ratio averaged 3.8x in 2023.
- Energy sector EV/EBITDA multiple fell to 5.2x end-2023.
- Apple market cap hit $3.0 trillion intraday in December 2023.
- Microsoft P/E at 35.2x trailing end-2023.
- Amazon EV/Sales ratio 2.9x end-2023.
- JPMorgan Chase P/B 1.7x end-2023.
- Average dividend yield for S&P 500 Dividend Aristocrats was 2.5% in 2023.
- Healthcare sector PEG ratio averaged 1.8x end-2023.
- Utilities P/E 18.1x, highest defensive sector multiple 2023.
- Magnificent 7 stocks traded at average 40x forward P/E end-2023.
- Small-cap Russell 2000 P/E 15.2x end-2023.
- Industrials EV/EBITDA 11.4x average 2023.
- Communication services sector P/S 2.8x end-2023.
- Real estate REITs FFOPO yield 4.2% average 2023.
- Materials sector P/B 2.3x end-2023.
- Consumer discretionary PEG 1.5x 2023 average.
- Overall market cap-to-GDP ratio (Buffett Indicator) at 190% end-2023.
- Goldman Sachs 400 US stocks median P/E 17.8x end-2023.
- 58% of S&P 500 stocks traded above 200-day moving average end-2023.
Company Valuations Interpretation
The market in late 2023 presents a classic tale of haves and have-nots, where the future of AI is priced to perfection at a staggering 70 times earnings for Nvidia, while the boring business of making money, like at JPMorgan, trades near the value of its tangible parts, and the entire spectacle rests on a Buffett Indicator screaming that the total market is worth nearly twice the country's annual output.
Economic Correlations
- US GDP growth of 2.5% in 2023 positively correlated with S&P 500 returns.
- Fed funds rate hikes from 0.25% to 5.25-5.50% in 2023 led to 10% market dip mid-year.
- Unemployment rate averaged 3.6% in 2023, near historic lows boosting equities.
- CPI inflation fell from 6.5% to 3.1% in 2023, aiding stock recovery.
- Corporate earnings growth for S&P 500 was 8.2% in 2023.
- US 10-year Treasury yield rose from 3.88% to 3.88% avg 2023, pressuring valuations.
- Consumer spending grew 2.7% real terms 2023, driving 60% of GDP.
- ISM Manufacturing PMI averaged 47.8 in 2023, contractionary but stabilized.
- Housing starts declined 6.5% to 1.41 million units in 2023.
- Nonfarm payrolls added 2.7 million jobs in 2023.
- Productivity growth 1.3% in 2023 supported profit margins.
- Oil prices averaged $77.58 per barrel WTI in 2023.
- US-China trade deficit narrowed to $279 billion in 2023.
- Corporate debt-to-GDP ratio 50% in 2023.
- Household net worth rose 10% to $156 trillion end-2023.
- Budget deficit 6.3% of GDP in FY2023.
- Capacity utilization 78.4% average 2023.
- Retail sales up 3.8% nominal 2023.
- Industrial production grew 1.1% in 2023.
- Personal savings rate averaged 4.6% in 2023.
- Wage growth 4.1% YoY average 2023.
- Core PCE inflation 2.9% end-2023.
- Business investment rose 2.2% real 2023.
- Trade balance deficit $773 billion in 2023.
- M2 money supply grew 0.2% in 2023 after contraction.
- Leading Economic Index declined 1.8% in 2023.
- S&P 500 EPS growth forecast 12% for 2024 tied to soft landing.
- Inverted yield curve persisted 80% of 2023, signaling recession risk.
Economic Correlations Interpretation
The market in 2023 was a resilient beast, grumbling through the Fed's harsh medicine and a housing hiccup but ultimately fattened by a strong job market, falling inflation, and the stubborn American consumer who kept spending even while saving less.
Investor Demographics
- 42% of US households owned stock directly or indirectly in 2022.
- Average age of US stock investor is 51 years as of 2023 survey.
- Women comprised 52% of Robinhood users by end-2023.
- Millennials (born 1981-1996) hold 32% of US stock market wealth in 2023.
- 15% of US adults started investing in stocks post-2020 pandemic.
- Baby Boomers control 52% of US stock market assets in 2023.
- 89 million Americans own stocks, up 10% since 2020.
- Hispanic Americans stock ownership rate rose to 28% in 2023.
- Retail investors represent 25% of daily US equity trading volume in 2023.
- Average retail investor portfolio size $25,000 in 2023.
- 61% of Gen Z own stocks via apps like Robinhood in 2023.
- Institutional investors hold 80% of S&P 500 market cap in 2023.
- Passive index funds own 47% of US large-cap stocks end-2023.
- Foreign investors hold 18% of US equities as of 2023.
- Self-directed brokerage accounts grew 15% to 70 million in 2023.
- 34% of stock owners are college graduates, per 2023 Gallup.
- High-net-worth individuals (>$1M) allocate 55% to equities in 2023.
- Women stock owners increased to 56% of total in 2023 surveys.
- Average investor age at Vanguard is 51, median account $250k 2023.
- Black Americans stock ownership at 34% in 2023, up from 27%.
- 72% of investors check portfolios daily/weekly via apps 2023.
- ESG-focused retail investors grew 25% to 12 million in 2023.
- 65% of under-30 investors prefer individual stocks over funds.
- Pension funds allocate 60% to equities globally in 2023.
- Family offices average 40% equity allocation in 2023.
- Crypto-owning investors 18% also hold stocks heavily in 2023.
Investor Demographics Interpretation
The stock market is no longer a country club for the old and wealthy, but a digital town square where everyone from the anxious millennials building wealth and the Gen Z day traders to the still-dominant Boomers holding the deed are all checking their phones far too often, proving that while ownership is democratizing, the real power—and the average gray hair—still resides with the institutions and the generation that remembers life before the internet.
Market Indices
- The S&P 500 index achieved a total return of 26.29% in 2023, including dividends, marking one of its strongest years since 2019.
- The Dow Jones Industrial Average (DJIA) closed at 37,689.54 on December 29, 2023, with a yearly gain of 13.70%.
- NASDAQ Composite Index rose 43.42% in 2023, driven by tech sector rally, reaching 15,011.35 by year-end.
- Russell 2000 small-cap index returned 16.93% in 2023 after a 20.44% decline in 2022.
- S&P 500's price-to-earnings ratio averaged 19.2x in 2023, compared to long-term average of 15.9x.
- From 1928 to 2023, S&P 500 average annual return including dividends was 9.9% nominal, 6.9% real after inflation.
- In 2022, S&P 500 declined 19.44%, worst year since 2008 financial crisis.
- DJIA hit all-time high of 40,003.60 on May 16, 2024.
- NASDAQ 100 index surged 55.1% in 2023, outperforming broader market.
- FTSE 100 index returned 3.76% in 2023 in GBP terms.
- Nikkei 225 rose 28.25% in 2023, best year since 2013.
- Shanghai Composite Index fell 3.70% in 2023 amid economic slowdown.
- S&P 500 dividend yield averaged 1.47% in 2023.
- VIX index averaged 16.9 in 2023, indicating moderate volatility.
- MSCI World Index returned 22.8% in 2023 in USD terms.
- S&P 500 reached 50 different all-time highs in 2023.
- DJIA traded above 38,000 for the first time on January 19, 2024.
- NASDAQ Composite hit record close of 16,299.00 on December 14, 2023.
- S&P MidCap 400 returned 16.47% in 2023.
- Wilshire 5000 total market index up 22.6% in 2023.
- S&P 500 equal-weight index outperformed cap-weighted by 5% in 2023.
- DJIA yield averaged 2.1% in 2023.
- S&P 500 P/E ratio hit 24.8x peak in July 2023.
- NASDAQ P/E averaged 28.5x in 2023.
- S&P 500 total market cap reached $42.1 trillion by end-2023.
- DJIA components' average P/E was 18.2x in 2023.
- S&P 500 forward P/E was 19.8x at end-2023.
- Russell 1000 growth index returned 31.05% in 2023.
- S&P 500 value index lagged with 22.1% return in 2023.
- NYSE Composite Index up 12.5% in 2023.
Market Indices Interpretation
After a sobering 2022 bear market nap, 2023 saw a spectacular, if somewhat expensive, bull market party where tech led the dance floor and small caps awkwardly shuffled back from the bar.
Trading Volume
- Average daily trading volume on NYSE reached 1.2 billion shares in 2023.
- NASDAQ average daily volume hit 4.5 billion shares in 2023.
- Total US equity trading volume exceeded 1.5 trillion shares in 2023.
- Options trading volume on Cboe reached 10.2 billion contracts in 2023.
- ETF trading volume averaged $2.8 trillion monthly in 2023.
- Dark pool trading accounted for 45% of US equity volume in 2023.
- High-frequency trading firms executed 50-60% of US stock market volume in 2023.
- Average bid-ask spread for S&P 500 stocks narrowed to 2.1 basis points in 2023.
- Retail trading volume peaked at 25% of total US equity volume in early 2021, declining to 18% in 2023.
- NYSE Arca daily volume averaged 1.1 million trades in 2023.
- Total ADV for US equities was 11.2 billion shares in Q4 2023.
- Futures volume on CME Group equity products hit 28.5 million contracts daily average in 2023.
- Block trades represented 6.5% of total NYSE volume in 2023.
- Off-exchange trading volume was 40.2% of total consolidated volume in December 2023.
- Average trade size on NASDAQ fell to 285 shares in 2023 from 350 in 2019.
- Total short interest in US stocks was 2.8% of float end-2023.
- Daily options volume exceeded 50 million contracts on peak days in 2023.
- Equity index futures notional value traded $1.2 trillion daily in 2023.
- ATS volume share reached 15.8% in US equities 2023.
- Retail brokers saw 23% ADV share in 2023.
- Total US stock market value traded $200 trillion in 2023.
- Apple Inc. (AAPL) average daily volume was 57 million shares in 2023.
- Tesla (TSLA) trading volume averaged 120 million shares daily in 2023.
Trading Volume Interpretation
While a staggering volume of trades paints a picture of frenzied public participation, the reality is a market dominated by high-speed machines and hidden venues, where the average investor's voice is increasingly just a whisper in a howling gale.
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