❮ Return to Blog

Bears Faced An Unexpected Year of Surprises

Bears Faced An Unexpected Year of Surprises

Estimated reading time: 3 minutes

Defying Expectations

It’s Been a Long Year… for Bears

Bearish sentiment was easy to come by at the beginning of 2023. Not just bearish sentiment on the stock market, but also pessimism over the Fed’s ability to control inflation, the economy’s fortitude to withstand rate hikes, and consumers’ willingness to spend as they embarked on a second year of high and still rising prices.

Despite a moment in March during the regional banking crisis when it felt especially precarious, most things held up well, or at least didn’t blow up into the catastrophe many expected. I was certainly on the cautious side of the fence and did not expect the protracted late-cycle behavior we’ve seen.

Inflation Surprises and Market Dynamics

Inflation came down faster than anticipated, much to the delight of markets as rate-sensitive sectors soared. There were fits and starts throughout the year, but the runaway performance of large-caps versus small-caps was remarkable. Enthusiasm over AI drove a blistering rally in a handful of names, and market bifurcation grew. It is worth pointing out that this type of return pattern, with large-caps outpacing small-caps, is characteristic of markets late in the business cycle. 

A bigger story than stock market performance in 2023 was that of inflation. All four major measures of inflation continued their descent closer to the Fed’s 2% target, but haven’t reached it yet. Nevertheless, markets decided that the Fed is done hiking rates and expect cuts to begin in the first half of 2024. More on that later.

A Defiant Foe Tamed

The celebration over lower inflation is warranted, as it has been public enemy #1 since mid-2021 and the cumulative effects are pinching household finances. The drop in energy prices and goods have led the path downward, but there remains some stickiness in services inflation and shelter that prevented the Fed from signaling the “all clear” even after this much progress.

SoFi Securities (Hong Kong) Limited and its affiliates (SoFi HK) may post or share information and materials from time to time. They should not be regarded as an offer, solicitation, invitation, investment advice, recommendation to buy, sell or otherwise deal with any investment instrument or product in any jurisdictions. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
SoFi HK does not make any warranties about the completeness, reliability and accuracy of this information and will not be liable for any losses and/or damages in connection with the use of this information.
The information and materials may contain hyperlinks to other websites, we are not responsible for the content of any linked sites. The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi HK. These links are provided for informational purposes and should not be viewed as an endorsement. The risk involved in using such hyperlinks shall be borne by the visitor and subject to any Terms of Use applicable to such access and use.
Any product, logos, brands, and other trademarks or images featured are the property of their respective trademark holders. These trademark holders are not affiliated with SoFi HK or its Affiliates. These trademark holders do not sponsor or endorse SoFi HK or any of its articles.
Without prior written approval of SoFi HK, the information/materials shall not be amended, duplicated, photocopied, transmitted, circulated, distributed or published in any manner, or be used for commercial or public purposes.


About SoFi Hong Kong

About SoFi Hong Kong

SoFi – Invest. Simple.


SoFi Hong Kong is the All-in-One Super App with stock trading, robo advisor and social features. Trade over 15,000 US and Hong Kong stocks in our SoFi App now.