3Q 2023 Market Summary

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Investor focus shifted during the third quarter of 2023 as concerns of an economic “hard landing” eased and gave way to concerns over stubbornly high inflation, causing most asset classes to experience modest declines. In July, the Federal Reserve increased the target range for the Federal Funds rate to 5.25-5.50% and left the range unchanged during their September meeting. Inflation remained high in the quarter, with headline CPI running at 3.7% due in part to soaring oil prices. The price for a barrel of oil jumped from $70 to $90 during the quarter. 

With the backdrop of stubbornly high inflation, strong consumer spending and robust employment trends signifying a soft landing, markets began pricing in a “higher for longer” interest rate environment. Short-term rates remained relatively flat following the Fed’s decision, but 10-year Treasury rates increased sharply from 3.8% to 4.6% during the quarter.

We anticipate that investors will remain focused on multiple sources of uncertainty. Beyond the ongoing impact of higher interest rates, investors must navigate the effects of geopolitical tension and gridlock in Washington, a drawn out conflict in Ukraine and rapidly escalating tensions and acts of aggression in the Middle East.

Rather than attempt to predict near-term potential economic outcomes, we are focused on longer-term investing outcomes built around your specific goals. For example, interest rates and bond prices will likely continue to fluctuate but we also recognize opportunities to generate much higher income from relatively safe Treasury bonds than in the past. And while near-term uncertainty will also cause stock market volatility, we believe that high-quality equities trading at reasonable valuations will continue to generate positive long-term returns.


The S&P 500 Index fell 3.3% during the quarter, with growth and value stocks falling equally. Utility and Real Estate stocks fell about 9% each, as these sectors are typically more exposed to higher interest rates. Energy stocks returned an impressive 12% during the quarter as production cuts overseas caused oil prices to jump. The Russell Mid-Cap Index fell 4.7% and the Russell 2000 Index fell 5.1%.

Stocks fell outside the US too, as the MSCI EAFE Index of developed non-US countries fell 4.1% on a strong US dollar, while Emerging Markets fell 2.9%.

Fixed Income

Bonds struggled during the quarter as interest rates jumped higher, although longer-maturity bonds faced most of the sell-off as short-term interest rates and bonds were relatively flat. The Bloomberg US Aggregate Bond Index fell 3.2% during the quarter. Below-investment grade corporate bonds generated a small 0.5% return as these bonds are typically less interest-rate sensitive but have historically seen larger declines during recessionary periods.


The Bloomberg Commodity Index returned 4.7% thanks to rising oil prices, although gold prices fell 2.3%. 

Important Information:
The Bloomberg Commodity Index is a broadly diversified commodity price index distributed by Bloomberg Index Services Limited. 
The Bloomberg US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.
The Bloomberg US Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD denominated securities publicly issued by US and non-US industrial, utility and financial issuers.
The Bloomberg US Government/Credit 1-3 Year Index is an unmanaged index considered representative of performance of short-term US corporate bonds and US government bonds with maturities from one to three years.
The Bloomberg US High Yield Corporate Bond Index is a rules-based, market-value-weighted index engineered to measure publicly issued non-investment grade USD fixed-rate, taxable and corporate bonds. 
The LBMA Gold Price Index is the global benchmark for unallocated gold and silver delivered in London.
The MSCI EAFE Index is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. and Canada.
The MSCI Emerging Markets Index is an index designed to measure equity market performance in global emerging markets.
The Russell 1000 Growth Index is a broadly diversified index predominantly made up of growth stocks of large US companies.
The Russell 1000 Value Index is a broadly diversified index predominantly made up of value stocks of large US companies.
The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. The index is maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group.
The Russell Midcap Index is a market capitalization-weighted index comprised of 800 publicly traded U.S. companies with market caps of between $2 and $10 billion. 
The Standard & Poor’s 500 Index, often abbreviated as S&P 500, is an American stock exchange market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. The S&P 500 index components and their weightings are determined by S&P Dow Jones Indices.
The S&P 500 Energy comprises those companies included in the S&P 500 that are classified as members of the GICS energy sector. 
The S&P/LSTA US Leveraged Loan 100 Index is designed to reflect the performance of the largest facilities in the leveraged loan market.
The West Texas Intermediate (WTI) oil, also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content.
Bloomberg Commodity Index (BCOM) is calculated on an excess return basis and reflects commodity futures price movements.

This report has been prepared for informational purposes only. It is based on information generally available to the public from sources believed to be reliable. No representation is made that information is accurate or complete. Any opinions expressed are subject to change without notice. Past performance is not indicative of future results. Yields are subject to market fluctuations. Additional information is available upon request. 

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