---
title: "NASDAQ Composite Index achieved its largest first-half gain in 40 years. These analysts' faces are swollen."
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/92879145.md"
description: "US stocks delivered a jaw-dropping \"report card\" in the first half of 2023, bringing the market back to the level it was at when interest rate hikes began in early 2022."
datetime: "2023-07-18T02:06:04.000Z"
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---

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# NASDAQ Composite Index achieved its largest first-half gain in 40 years. These analysts' faces are swollen.

The US stock market delivered a stunning "report card" for the first half of 2023. Led by technology stocks, the Nasdaq surged by 31.73%, marking the largest half-year increase since 1983. The S&P 500 index rose by 15.51%, delivering its best performance in the first half of the year since 2018. The Federal Reserve's 500 basis points of interest rate hikes seemed to have little impact, as the market returned to the level it was at when the rate hikes began in early 2022.

Investors who entered the market at the beginning of this year have made substantial gains, while the bears have suffered losses of approximately $120 billion by the end of June. Looking back at the predictions made by major investment banks and professionals at the end of 2022 and the beginning of this year, some of them were outrageously wrong. If one were to follow these recommendations for investment, you would have contributed to the bears' massive losses.

The Three Michaels

Michael Burry, the famous Wall Street bear, had advised selling stocks before the Federal Reserve's February meeting. He simply tweeted the word "Sell," and later publicly admitted that he was wrong, despite his legendary prediction of the bursting of the US real estate bubble in 2008. Burry stated that he did not anticipate the strong buying power at market lows. He believes that the new generation of buyers who have unwavering faith in the US stock market is unprecedented, dating back to the 1920s.

Furthermore, Burry has now deleted his Twitter account, possibly due to heavy losses from shorting Tesla, and no longer has the mood to continue using the Tesla-branded social media platform.

![1.jpg](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20230718/1689645318813348.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

Michael Wilson, the Chief US Equity Strategist at Morgan Stanley, confidently predicted at the end of 2022 that the S&P 500 index would fall to 3,000 points in the first half of 2023. He pointed out that the mispricing of US stocks was even more severe than during the 2008 financial crisis, and the market had not fully priced in the possibility of an economic recession.

Now it seems that the United States has seemingly emerged from the high inflation crisis without a recession. The rate of increase in US consumer prices in June reached its lowest level since March 2021, providing further support for the Federal Reserve's decision to pause interest rate hikes. The S&P 500 index has also reached 4,500 points, leaving one to wonder if Wilson is looking for a hole to hide in.

Michael Hartnett, known as Wall Street's most accurate analyst, also had a bearish view on the US stock market at the end of 2022. He believed that the S&P 500 index would decline by nearly 10% to 3,600 points in the first half of 2023, followed by a rebound of 17% to 4,200 points in the second half of the year. It seems that Hartnett's prediction was premature, as the decline in the first half of the year for the S&P 500 index was only brief, occurring in mid-February and early March, with a low point near 3,800. Since the end of March, the index has been on an upward trend, with component stock NVIDIA experiencing a gain of over 200% in the AI boom. Other bearish analysts

Other analysts who are bearish on the US stock market at the end of 2022 include "bearish" Goldman Sachs Chief Strategist David Kostin and Bank of America's Head of Stocks and Quantitative Strategies, Savita Subramanian. Among investment banks, Barclays, Societe Generale, and UBS are all bearish on the US stock market and expect the US economy to enter a recession, with their target levels for the S&P 500 index not exceeding 3900 points.

After being proven wrong by the market, David Kostin and Savita Subramanian have surrendered and joined the bullish camp. Goldman Sachs has raised its 2023 forecast for the S&P 500 index from 4000 points to 4500 points. Kostin had previously warned investors that the S&P could fall to 3600 points by the end of 2022. Bank of America, on the other hand, declared the end of the bear market and expects the S&P 500 index to close around 4300 points by the end of this year.

Still bearish

Among these analysts, Michael Wilson and Michael Hartnett still maintain a bearish view. Although Wilson admits that his previous views were wrong, he believes that investors may "wake up suddenly" in the second half of the year. He believes that the weakening of fiscal support, liquidity, and inflation will put pressure on the upward trend of the US stock market in the second half of this year.

In a report last month, he wrote: "Given our fundamental view of economic growth, we find it difficult to accept the current exuberant state of the stock market. If the economy reaccelerates in the second half of the year as expected, then the optimistic view supporting the rise in stock prices will be validated. Otherwise, many investors involved in large-scale risk investments may suddenly wake up."

Hartnett believes that there are insufficient reasons for the US stock market to rise. He stated that the market's initial concerns about an economic recession in the first quarter are now shifting to excessive optimism for the second quarter. He believes that rising interest rates and declining liquidity are the main risks for the bulls in the third quarter. In addition, some central banks have suddenly turned hawkish, leading to a significant increase in bond yields, especially in the UK, Australia, and Norway. He believes that the Fed's interest rate hikes are not over.

Hartnett also pointed out that global liquidity will shrink by over $1 trillion in the next 3-4 months. Although there has been a slight rebound in funds flowing into US stocks, most of the new funds have flowed into cash, and the market has a more negative view on stocks, favoring cash and investment-grade bonds. He warned that if the federal funds rate reaches 6%, it will be the biggest "pain trade" in the next year.

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