Third Quarter 2023 Economic Review
For the three-month period ending September 30th, the S&P 500 Total Return Index decreased 5.4% while the Bloomberg U.S. Aggregate Intermediate Bond Index fell 1.9%; for the year, the S&P 500 Total Return Index is up 13.0% and the Bloomberg U.S. Aggregate Intermediate Bond Index is down 0.3%.
While economic data continues to show a resilient economy combined with easing inflationary pressures, concerns over high yields and rising oil prices had a negative effect on both stock and bond prices. The Federal Reserve did not raise interest rates at their last meeting but suggested that the level of rates will likely be “higher for longer.” The 10-year Treasury responded by increasing to its highest rate in 6 years. Going forward, investors will continue to be focused on corporate earnings and the pace and path of Federal Reserve interest rate decisions. The consensus forecast calls for a modest decline in corporate profits for the third quarter and for Fed funds to remain unchanged at the next meeting.
Large and Growth outperformed Small and Value, with Energy at the top and Utilities at the bottom of the sector performance. Short-term treasuries provided attractive yields that certainly provided an alternative to equities. TINA (There Is No Alternative) has clearly left the building.
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