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2023 Market Recap: A Year of Surprises in Stocks and Sectors

If there was one name that can perhaps best describe the stock market recap of 2023, it would be Clayton Kershaw. While homeboy long played for the modern-day evil empire, Los Angeles Dodgers, all fans must admit: his curveball is a thing of devastating beauty. First, you see it and then, you don’t.

And that’s honestly the feeling surrounding 2023’s stock market recap. We were anticipating (with dread, I might add) certain events to happen and they didn’t. Instead, we got quite a few surprises, especially from the technology sector.

Basically, we learned that the equities space is a constantly evolving and dynamic space. While you can make certain assumptions, it’s best to maintain flexibility. You just never know what Wall Street might pitch next.

Nvidia and the Generative AI Mania

Nvidia corporation (NVDA) logo displayed on smartphone with stock market chart background. Nvidia is a global leader in artificial intelligence hardware.Source: Evolf / Shutterstock.com

Easily one of the top-performing entities of 2023 is technology juggernaut Nvidia (NASDAQ:NVDA). Really, no stock market recap is complete without mentioning NVDA. In 2023, shares of the semiconductor specialist gained nearly 246%. And when a rare few naysayers questioned whether NVDA can keep going, it managed to end on a high note. In the trailing month, NVDA returned just under 6%.

Fundamentally, practically everything centered on the company’s graphics processing units (GPUs). Previously, Nvidia garnered attention from this space due to its relevance for advanced video games. Later, the cryptocurrency-mining industry blossomed, which boosted NVDA. For 2023, the spotlight focused brightly on generative artificial intelligence. With more companies deploying digital intelligence in their business processes, Nvidia seems to have a bright future.

According to Bloomberg Intelligence, the generative AI ecosystem could expand at a compound annual growth rate (CAGR) of 42% over the next 10 years. That translates to a market size of $40 billion in 2022 to $1.3 trillion by 2032. Nvidia could play a huge role but some caution may be necessary. In the trailing six months, NVDA only gained 17%.

Recession? What Recession?

An image of a recession-recover diceSource: FrankHH / Shutterstock

One of the biggest stories regarding any stock market recap has got to be the recession that never was. To be sure, it’s left many folks scratching their heads. Following a severe economic disruption by Covid-19, the federal government marshaled fiscal and monetary tools to get the machinery back on track. It did so but at the cost of high inflation. Suddenly, the Federal Reserve had a massive fight on its hands.

Obviously, policymakers chose to raise borrowing costs, which always threatened a recession. Seemingly as evidence, the regional banking crisis strongly signaled that not everything was A-okay. However, the government got in front of that problem quickly, acting decisively to support depositors. Further, the labor market continued to be robust overall. At the same time, the Fed saw encouraging disinflationary data. And that has led to discussions about possible interest rate cuts in 2024.

So, are we out of the woods? Just because we avoided the recession bullet in 2023 doesn’t necessarily mean we should let our guard down. We may not be on the zero line of the battle. But we’re arguably still on the front line. Therefore, caution is necessary.

Gold Makes a Late Surge

Gold bars and Financial concept, studio shots. Costco's gold bars, cost stockSource: Misunseo / Shutterstock.com

While the ebb and flow of last year presented a unique dynamic, not everything presented a novel concept. Though it incurred an incredibly choppy performance, the gold market managed to rise conspicuously higher. At the start of the year, spot gold traded hands for around $1,831. At the end, one troy ounce of the yellow metal fetched approximately $2,072. Further, gold enjoyed a late surge to restore positive momentum.

As stated earlier, a possible pivot in monetary policy helped reinvigorate the precious metal. To be sure, between mid-September to early October, it appeared that gold would crash out of relevance. However, rumors of interest rate cuts in 2024 picked up steam. Eventually, even Fed Chair Jerome Powell acknowledged the possibility of pivoting toward a dovish strategy. Nothing is set in stone but more disinflationary data may inspire policymakers to make the move.

Still, lower rates would imply a relative devaluation of the dollar relative to other currencies. And since commodities are priced in dollars, gold may rise. So, it’s one of the sectors to watch looking ahead from this stock market recap.

Watch the Crypto Market

Crypto coins on a phone screen showing stats for various cryptocurrencies.. Cryptos to Buy Before the Market Swing. rising meme cryptosSource: Chinnapong / Shutterstock

Of course, the biggest non-equities related sector to bounce higher that doesn’t quite fit into a stock market recap is the cryptocurrency sector. After trading sideways in a frustrating consolidation pattern between March through the first half of October, the blockchain ecosystem skyrocketed. I’m not entirely sure it’s about to come down from its high anytime soon.

Sure, it’s a volatile market so anything can happen. However, as Generation Z gets older and subsequently increases its purchasing power, cryptos could easily blossom from here. After all, this is the first digital-only generation that practically has no memories of an analog paradigm. It only makes sense that this age cohort gravitates toward decentralized digital assets.

Yes, we’re talking about a stock market recap. Still, for market gamblers, you may want to consider compelling blockchain stocks. To be clear, we’re talking extreme risk. But as you can see from the performance, the arena also brings extreme rewards.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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