Q4 2023 Market & Economic Review

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Another Volatile Year in the Books

  • After declining 28% peak to trough during 2022, the S&P 500 Index advanced over 26% in 2023 and is hovering near its January 2022 peak. Valuation multiples expanded in 2023, as earnings did not grow, adding pressure on the stock market to produce profit growth in 2024.

  • After a rapid decline in intermediate and long-term interest rates in the fourth quarter, bonds finished 2023 with a respectable 5.5% annual return for the Bloomberg Aggregate Bond Index. With inflation below 4%, bonds are positioned to produce real returns in 2024, particularly if the Federal Reserve starts cutting the fed funds rate in the latter half of 2024.

  • The jury is still out on whether the economy will see a recession or the soft landing Wall Street is hoping for. Economic history would suggest not enough time has passed since the Federal Reserve’s aggressive rate hiking cycle to determine whether the economy has successfully navigated higher interest rates.

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Any performance data shown represents past performance. Past performance is no guarantee of future results.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

This website is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only, and do not represent the performance of any specific investment. Index returns do not include any expenses, fees or sales charges, which would lower performance.

The S&P 500® is an unmanaged index of large companies and is widely regarded as a standard for measuring large-cap and mid-cap U.S. stock-market performance. Results assume the reinvestment of all capital gain and dividend distributions. An investment cannot be made directly into an index.

The Bloomberg U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, mortgage backed securities, asset-backed securities and corporate securities, with maturities greater than one year.

Yield Curve is a line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity. There are three main types of yield curve shapes: normal (upward sloping curve), inverted (downward sloping curve) and flat. Yield curve strategies involve positioning a portfolio to capitalize on expected changes.