2022 was one of the most turbulent years for investors in recent times. Trillions of dollars were wiped off the equity and bond markets. The aftermath of the response to the Covid-19 pandemic, supply chain issues, and the Russia-Ukraine war caused a spike in inflation. The resulting interest rate increases ushered in a period of higher volatility and fear. Few asset classes were left unscathed. The S&P 500 was down almost 20%, while the tech-heavy Nasdaq saw a 33% decline.

2023 has been a blistering year so far for the financial markets. The price action is in large part due to the U.S. Federal Reserve's interest rate changes. The Fed's Dual Mandate of maximum employment and low inflation prompted a 4% increase in interest rates in 2022 to combat the runaway inflation. The inflation figures have been swiftly falling, so the Fed curbed its most recent interest rate hike to just 0.25% with the hopes of avoiding a prolonged recession. The markets reacted as expected. Risk-on assets have soared, making up for some of the losses from the previous year.

The NASDAQ-100 (QQQ), S&P 500 (SPY), Dow Jones Industrial Average (DIA), and the Russell 2000 (IWM) have seen varying degrees of positive returns. The Nasdaq leads the way with a substantial 15% increase year-to-date, followed closely by the small-cap Russell 2000 at 13%. The S&P 500 spirited a healthy 7.8% return since the turn of the year and finally, the Dow has lagged behind with a positive 2.4% gain.