Mortgage rates have come off of recent lows with the 30-year national average from Bankrate.com currently at 6.53%.  While rates are not making new lows, those are much more attractive levels than last fall when they peaked well above 7%. On a rolling 3-month basis, the decline in mortgage rates continues to rank as some of the largest since the late 1990s (after the largest increase since the 1990s).

Given the alleviation on the rates front, purchase applications have been rebounding.  The Mortgage Bankers Association’s weekly purchase application index is currently 19.2% above the post-pandemic low put in place in the first week of the year.

When rates were rising rapidly, massively stifling demand last year, refinance applications had taken a much larger hit than purchase applications.  At the worst levels during the holidays, refinance applications reached the lowest level since May 2000. Since the start of the year, though, refinance applications have surged. Although there is still plenty of lost ground still to make up as applications continue to run below the past two decades’ range,  the 68% month-over-month increase in applications has been the largest jump since March 2020 when applications doubled. Of all weekly readings since 1990, the current one-month increase ranks in the top 5% of all month-over-month moves on record. Click here to learn more about Bespoke’s premium stock market research service.

In today’s Morning Lineup post, we compared Chat GPT’s rapid emergence into the mainstream to the rise of a number of other products.  While Artificial Intelligence, or AI, has been a buzzword for some time now, this year it certainly has been in the spotlight more than in the past.  Given the popularity of Chat GPT, some mega-caps like Alphabet (GOOGL) and Baidu (BIDU) have jumped in on the opportunity to announce their own versions.  To quantify how in focus AI has become, below we show the Google Trends scores for a handful of related terms.  Readings of 100 would indicate the peak in searches for a given topic globally.

Searches for “Artificial Intelligence” or its abbreviation have reached a new record while the field of “Machine Learning” has similarly seen searches rip higher and remain elevated in the past year.  One interesting area which has not seen searches rise much is in regards to the automotive industry.  Searches for “self-driving” have not picked up much within the range of the past few years. That is also well below the record from March 2018 when searches spiked due to a fatal incident involving Uber’s self-driving car. That being said, it is worth noting that even before the Chat GPT craze, these searches had been moving higher quite rapidly.

As we discussed earlier, although the broad topic of AI is in vogue, related stocks have not gotten much of a boost in reaction to this news.  For those having made announcements regarding AI in recent days like Alphabet (GOOGL), Microsoft (MSFT), and Baidu (BIDU), relative strength versus tech more broadly (proxied by the Nasdaq 100 ETF (QQQ)) has not done anything too notable in terms of long term trends. For MSFT and GOOGL, relative strength has been sideways at best over the past year, and BIDU has been moving higher in recent months, but that follows a few rough years for the stock relative to US tech. The same can be said for a more encapsulating basket of AI-related stocks proxied by the Global X Robotics and Artificial Intelligence ETF (BOTZ). While the relative strength has been trending lower (meaning underperformance versus tech more broadly) the past few months have seen a rebound. Click here to learn more about Bespoke’s premium stock market research service.

After seeing the total market cap for the Russell 1,000 fall by $10.9 trillion in 2022, we’ve seen a rebound of $2.9 trillion in market cap so far in 2023.  Below is a look at the total change in market cap by sector across the Russell 1,000 so far in 2023 and for all of 2022.  The Tech sector saw its market cap fall $4.35 trillion last year, and it has seen its market cap rise by $1.176 trillion to start 2023.  Consumer Discretionary’s market cap has risen by $701 billion, followed by Communication Services at $516.9 billion and Financials at $373 billion.

Four sectors have actually seen their market caps fall this year.  Health Care’s market cap has fallen the most at -$141 billion, while Energy has fallen $57 billion, Consumer Staples has declined $32.2 billion, and Utilities has fallen $29.9 billion.

Below is a look at the biggest gainers in market cap so far this year at the individual stock level.  Seven stocks have already gained more than $100 billion in market cap this year.  Apple (AAPL) has jumped the most at $333.7 billion, followed by Tesla (TSLA) at +$227 billion, Amazon (AMZN) at +$190 billion, Alphabet (GOOGL) at +$176 billion, and Meta (META) at +$166.8 billion.

While the seven biggest gainers to start 2023 have added a combined $1.377 trillion in market cap, they lost a combined $4.86 trillion in market cap in 2022. Click here to start a two-week trial to Bespoke Premium.

“Big Tech” stocks like Apple (AAPL), Amazon (AMZN), and Alphabet (GOOGL) have taken a breather over the past few days after reporting earnings last week.  It’s important to note, however, just how much these stocks had rallied leading up to their near-term highs last week.  Through last Thursday, the NYSE FANG+ had rallied 34.44% over the prior month.  That was actually its biggest month-over-month rally in the index’s history dating back to 2014!  As shown below, the index managed to make a “higher low” in early January just before it took off, and it just barely took out its highs from last August when it peaked last week before pulling back slightly.

While last week’s earnings results provided some negative fundamental catalysts (some of which we highlight in our most recent Conference Call Recaps), there is also the technical aspect that this group of stocks had gotten historically overbought.  At last week’s highs, the 14-day RSI reached 77.4.  Normally, any reading above 70 would be considered overbought.  At 77.4, the RSI reading for the NYSE FANG+ index was the most elevated since June 2021 and ranked in the 97th percentile of all days since 2014.  After further declines to start out this week, the RSI is still elevated, but back below 70. Click here to learn more about Bespoke’s premium stock market research service.