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The Best and Worst Performing Sectors in 2023

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The Best and Worst Performing Sectors in 2023

The Best and Worst Performing Sectors in 2023

In 2023, the U.S. stock market saw surprisingly strong returns, even as interest rates climbed higher.

The S&P 500 rose over 24% amid exuberance around AI stocks and big tech, lifting returns across the index. Traditionally defensive stocks, on the other hand, declined. Overall the stock market recovered losses from 2022’s plunge, and is now hovering near all-time highs.

The above graphic is an augmented version of the Finviz treemap, showing the best and worst sectors in 2023.

2023 Winners

Several sectors were in the green this year amid solid consumer spending and steady economic growth. Below, we’ll look at some of the strongest performers:

Technology

In a breakthrough year, the promise of AI’s potential catapulted the tech sector to 56% returns.

Chipmaker Nvidia skyrocketed 239% as demand for AI chips accelerated. Apple and Microsoft each had banner years after a dismal 2022. Overall, big tech stocks were responsible for a large share of the S&P 500’s gains.

In fact, the “Magnificent Seven”—made up of Nvidia, Apple, Microsoft, Alphabet, Amazon, Tesla, and Meta—drove an estimated 75% of the market’s returns and together, they cover about 30% of its total value.

CompanySector2023 Return
NvidiaInformation Technology+239%
AppleInformation Technology+48%
MicrosoftInformation Technology+57%
AlphabetCommunication Services+59%
AmazonConsumer Discretionary+81%
TeslaConsumer Discretionary+102%
MetaCommunication Services+194%

Communication Services

As the second-best sector, communication services rallied 54% in 2023. From media and internet companies to telecom and broadband service providers, the sector covers a diverse range of companies—many that may stand to benefit from generative AI.

With 194% gains, Meta was a top performer as advertising revenue improved. At the same time, Netflix (+65%), Alphabet (+59%), and video game publisher Take-Two Interactive (+55%) each saw strong momentum.

Consumer Cyclical/Discretionary

In one of the best years on record, the S&P 500 consumer discretionary sector witnessed over 41% returns. Amazon, Home Depot, and Tesla fall within this sector and each saw at least double-digit returns supported by solid retail sales. Tesla is projected to see record deliveries in 2023.

Cruise-line operator Royal Caribbean was a leading company, with over 162% returns for the year. Record travel demand drove strong performance across both Royal Caribbean and Carnival.

2023 Losers

Unlike cyclical and growth-oriented sectors, defensives did not fare as well. Here are some of the poorest performers of 2023:

Utilities

With -10% returns, utilities declined the most as high interest rates weighed on borrowing costs in the capital-intensive sector.

Not only that, utilities became less attractive as 10-year Treasury yields were higher than utilities dividend yields in 2023—a first in over a decade. In this way, investors looking for income shifted away from the sector.

The good news for utilities is that interest rates are projected to fall over the next several years, according to IMF projections.

Energy

Oil prices declined 10% in 2023, and the sector also ended in the red. Despite OPEC+ production cuts aimed to boost prices, key benchmarks sank 20% from their annual peak.

Devon Energy, one of the largest American shale producers declined 22% and Chevron dropped 14% as oil production and refinery operations missed targets.

Consumer Staples/Defensive

While the consumer staples outperformed in 2022, investors had a different view on it this year. This led to a mixed bag of returns in the sector.

Known for companies that make everyday items, consumer staples covers Coca-Cola, Procter & Gamble, and Walmart. Within the sector, packaged food faced some of the worst declines amid competition from lower-priced products as consumers looked to more affordable options.

What’s Next for 2024?

Whether or not mega cap growth stocks will continue to power the U.S. stock market is anyone’s guess.

While economic signals appear steady, it may be some time yet until interest rates fall to 2%. A second burst of inflation may also resurface if geopolitical tensions get worse. How this all impacts U.S. stock market returns may continue to upend expectations in the post-pandemic era.

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Mapped: The World’s Least Affordable Housing Markets in 2024

See which housing markets are considered ‘impossibly unaffordable’ according to their median price-to-income ratio.

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The World’s Least Affordable Housing Markets in 2024

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Many cities around the world have become very expensive to buy a home in, but which ones are the absolute most unattainable?

In this graphic, we highlight a number of housing markets that are deemed to be “impossibly unaffordable” in 2024, ranked by their median price-to-income ratio.

This data comes from the Demographia International Housing Affordability Report, which is produced by the Chapman University Center for Demographics and Policy.

Data and Key Takeaway

The median price-to-income ratio compares median house price to median household income within each market. A higher ratio (higher prices relative to incomes) means a city is less affordable.

See the following table for all of the data we used to create this graphic. Note that this analysis covers 94 markets across eight countries: Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom, and the United States.

RankMetropolitan MarketCountryMedian price-to-income
ratio
1Hong Kong (SAR)🇨🇳 China16.7
2Sydney🇦🇺 Australia13.8
3Vancouver🇨🇦 Canada12.3
4San Jose🇺🇸 U.S.11.9
5Los Angeles🇺🇸 U.S.10.9
6Honolulu🇺🇸 U.S.10.5
7Melbourne🇦🇺 Australia9.8
8San Francisco🇺🇸 U.S.9.7
9Adelaide🇦🇺 Australia9.7
10San Diego🇺🇸 U.S.9.5
11Toronto🇨🇦 Canada9.3
12Auckland🇳🇿 New Zealand8.2

According to the Demographia report, cities with a median price-to-income ratio of over 9.0 are considered “impossibly unaffordable”.

We can see that the top city in this ranking, Hong Kong, has a ratio of 16.7. This means that the median price of a home is 16.7 times greater than the median income.

Which Cities are More Affordable?

On the flipside, here are the top 12 most affordable cities that were analyzed in the Demographia report.

RankMetropolitan MarketCountryMedian price-to-income
ratio
1Pittsburgh🇺🇸 U.S.3.1
2Rochester🇺🇸 U.S.3.4
2St. Louis🇺🇸 U.S.3.4
4Cleveland🇺🇸 U.S.3.5
5Edmonton🇨🇦 Canada3.6
5Buffalo🇺🇸 U.S.3.6
5Detroit🇺🇸 U.S.3.6
5Oklahoma City🇺🇸 U.S.3.6
9Cincinnati🇺🇸 U.S.3.7
9Louisville🇺🇸 U.S.3.7
11Singapore🇸🇬 Singapore3.8
12Blackpool & Lancashire🇬🇧 U.K.3.9

Cities with a median price-to-income ratio of less than 3.0 are considered “affordable”, while those between 3.1 and 4.0 are considered “moderately unaffordable”.

See More Real Estate Content From Visual Capitalist

If you enjoyed this post, be sure to check out Ranked: The Most Valuable Housing Markets in America.

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