Market Update February 13
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September 2023

Market Review - February 13, 2023



Last week, in our inaugural market review, we analyzed one of the hottest starts to the year in financial markets. We delved into the influence of the U.S. Federal Reserve's intervention on the market and examined the performance of various asset classes. You can read the full post here.

This week, we will dive deeper into the historical impact of interest rate changes and how it impacts market performance. Once again, we will inspect the recent performance of various asset classes and strive to provide some clarity about the current financial landscape.

Interest Rates

The Federal Reserve has tempered its interest rate increases in pursuit of a "soft landing." We've analyzed past instances where the Fed has paused rate hikes, as depicted in the red highlights on the chart below. From our analysis of the two previous occasions, we observe that the market initially reacts positively and surges to new record highs. However, these gains tend to be short-lived, and sharp declines of 55% and 34% were experienced in 2009 and 2020. Will we witness a similar pattern this time?

S&P 500 performance versus interest rate changes

The next Consumer Price Index (CPI) print will be available tomorrow, Tuesday 14th February. If the downward trend continues we can expect rates to remain static.

Market Indices

Last week, the Nasdaq-100 (QQQ), S&P 500 (SPY), Dow Jones Industrial Average (DIA), and Russell 2000 (IWM) all witnessed different degrees of pullbacks. The Russell 2000, which tracks small-cap stocks, experienced the steepest decrease at -3.39%. The Nasdaq suffered a reversal of 2%. Meanwhile, the SPY saw a drop of more than 1%, while the Dow remained flat for the week.

Market Indices performance year-to-date

S&P 500 - Technical Analysis

From the viewpoint of a technical analyst, the S&P 500 appears to be in a robust state. On January 17th, it formed a "golden cross," where the 50-day Simple Moving Average crossed over the 200-day Simple Moving Average. During the previous golden cross in July 2020, the S&P 500 experienced a surge of more than 50% to new all-time highs. However, it is important to note that the current market conditions are vastly different from those of the Covid era, as interest rates are no longer near zero and the Federal Reserve's monetary stimulus is not as prevalent. While a repeat of the 2020/2021 performance is not likely, these technical indicators are still noteworthy.

S&P 500 technical analysis

Microsoft-backed OpenAi vs Google

If you have not been hiding in the wilderness, you probably heard something about ChatGPT. Developed by OpenAI, ChatGPT is a language model that uses deep learning to generate human-like text. It has taken the world by storm. ChatGPT crossed 1 million users just one week after its launch in November 2022. To put that into perspective, Instagram took 2 months to achieve the same feat. ChatGPT is reported to have over 13 million daily active users as of today. Microsoft invested $10B in OpenAI, acquiring 46% of the business.

Google has held a monopoly on search since its inception. Microsoft just announced that they will incorporate the technology powering ChatGPT into their Bing search engine and Edge browser. This development will impact Google's dominance over search. Google responded last week with the announcement of Bard AI. During a live demo of the product, the application gave an incorrect answer to a question. Google's share price dropped dramatically on Tuesday and Wednesday, wiping $177 billion off its market cap last week. This is equivalent to the combined market cap of the smallest 580 public traded stocks in our STRATxAI universe.

Google drawdown

Tesla Volume Explodes

Retail investors love Tesla, and they will be delighted by its recent performance. After a large decline in 2022, Tesla has made a remarkable recovery with its stock price surging 82% year-to-date. It was last week that the trading volume of Tesla's shares surpassed that of the SPY, which tracks the S&P 500 index. Our analysis revealed that it is an extremely rare occurrence that an individual stock's liquidity surpasses that of SPY.

Tesla liquidity


Let's redirect our attention to the style factors. A review of the returns of the most popular style factors - Value, Quality, Low Volatility, Dividend Yield, and Momentum - reveals that Value and Quality are outpacing the rest with impressive positive returns year to date. Meanwhile, although Low Volatility and Dividend Yield are still in positive territory this year, they are significantly lagging behind the other factors.

factor performance year to date

If you'd like to learn more about equity style factors then you can visit our topic here.


The weekly sector performance shows a reversal from the previous week's data. The Retail Trade and Technology Services sectors saw large declines while the Energy Minerals sector saw a +3% increase, almost standing alone with a positive weekly trend.

sector performance weekly


The crypto market experienced some substantial declines too, with Bitcoin falling 4.5% and Ethereum 6.2%.

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