Investors had hoped that the stock market would find its footing in 2023 after a tough showing last year. So far, the market has done a reasonably good job of delivering. With the first quarter having come to an end last Friday, major market benchmarks performed well, with the S&P 500 (^GSPC -0.46%) seeing gains of 7% in the first three months of the year.
The Dow Jones Industrial Average (^DJI -0.98%) hasn't held up as well, managing only to post a gain of less than 1% for the quarter. Yet when you look at the stocks that prevented the Dow from losing ground, you might be surprised to see that they all have one thing in common -- and that thing happens to be exactly what many investors thought would hold them back in 2023.
The Dow's top stocks so far in 2023
The one surprising factor in the Dow's rise is that all four of the average's top-performing stocks are in the technology sector. Salesforce.com (CRM -1.10%), Apple (AAPL 0.52%), Intel (INTC 1.77%), and Microsoft (MSFT -2.45%) were the only Dow components to post gains of 20% or more in the first three months of the year.
The gains for all four of these stocks came amid signs that their respective businesses were resisting macroeconomic pressures better than many had expected. At the beginning of March, Salesforce released financial results that showed that it had seen revenue climb 18% in fiscal 2023, with adjusted earnings rising by 10% to $5.24 per share. Moreover, the customer relationship management software specialist projected that it would see accelerating profit growth in fiscal 2024, with guidance for $7.12 to $7.14 per share in earnings on an adjusted basis.
For Apple, sizable gains came late in the period, as investors started to feel more confident about the company's prospects. Worries about the ability to overcome supply chain challenges kept the stock in check for a while, but stock analysts increasingly pointed to signs that demand for its core iPhone line of smartphones remained solid. Moreover, Apple has worked hard to keep costs reined in, and plans to join the virtual revolution with a mixed-reality headset have received a favorable reception.
Perhaps the most surprising winner in this set of four was Intel, because the chipmaker has had a lot of trouble executing on its business opportunities. Yet there was new enthusiasm about the potential for Intel to provide vital semiconductors to innovative tech companies seeking to pursue artificial intelligence initiatives. Moreover, with data centers remaining a key component of digital transformation efforts for countless businesses worldwide, longer-term tailwinds for Intel remain in place. Now, Intel just has to take advantage of them.
Lastly, Microsoft generated plenty of optimism on the AI front as well, with its key partnership with ChatGPT pioneer OpenAI producing meaningful potential. Combined with its core Office software and Azure cloud infrastructure businesses, Microsoft has put itself in position to capture plenty of growth from some of the most cutting-edge ideas in technology, and it's showing signs of pulling away from some of its oldest rivals in the software arena.
Keep watching tech
Many market watchers were surprised to see tech climb even as interest rates continued to move higher. Yet with stress in the financial system, investors saw some of these blue chip tech stocks as safe havens, with reliable business performance plus the possibility of future growth. In a tough market environment, such sentiment could help push the Dow still higher in the second quarter of 2023 and beyond.
