Market Performance in Q4 2023

Index*TickerQTDYTDTTM Yld
Dow JonesDIA13.03%15.98%1.81%
S&P 500SPY11.64%26.14%1.40%
S&P 500 Equal WeightRSP11.81%13.65%1.64%
Mid-Cap 400MDY12.53%17.12%1.26%
Russell 2000IWM14.03%16.80%1.35%
Micro CapIWC16.00%9.09%1.17%
EAFE ex USEFA10.81%18.07%2.97%
Emerging MarketsEEM7.52%8.90%2.63%
Frontier MarketsFM2.84%9.78%3.60%
US Bond AggAGG6.69%5.59%3.13%
Mortgage Backed BondsMBB7.33%4.99%3.40%
IG Corporate BondsLQD9.85%9.27%4.00%
High Yield BondsHYG7.16%12.41%5.73%
Municipal BondsMUB6.99%5.86%2.65%
USD/CAD        1.32451.3549-2.24%
USD/MXN     16.954019.4740-12.94%
EUR/USD        1.10361.0702-3.12%
GBP/USD        1.27291.2097-5.22%
USD/JPY  141.0600131.11007.59%
AUD/USD        0.68100.68130.04%
USD/CNY        7.09786.89722.91%
Sector*TickerQTDYTDTTM Yld
Consumer DiscretionaryXLY11.29%39.63%0.78%
Real EstateXLRE18.80%12.27%3.31%
Consumer StaplesXLP5.43%-0.89%2.63%
Fed Funds5.33%4.33%1.00%
1y Treasury4.79%4.73%0.06%
2y Treasury4.23%4.41%-0.18%
3y Treasury4.01%4.22%-0.21%
5y Treasury3.84%3.99%-0.15%
7y Treasury3.88%3.96%-0.08%
10y Treasury3.88%3.88%0.00%
20y Treasury4.20%4.14%0.06%
30y Treasury4.03%3.97%0.06%
Credit Spreads (BPS)**12/29/202312/30/2022Chg
1-3y Corp OAS0.750.87-0.12
3-5y Corp OAS0.921.18-0.26
7-10Y Corp OAS1.261.71-0.45
High Yield BB OAS2.043.09-1.05
High Yield B OAS3.425.19-1.77
High Yield CCC OAS8.5111.53-3.02
* Morningstar
**Economic Research – Federal Reserve Bank of St. Louis (FRED)
*** Data provided by Refinitiv


The financial market, stock and bonds, finished the year strong on positive statements from Fed Chairman Jerome Powell. He indicated the Fed was planning to cut interest rates in 2024 by 0.75%. This announcement sent stock prices higher and bond yields lower.

2023 grinded higher despite concerns of higher interest rates, inflation and a recession. The US consumer, despite the many headwinds, continued to spend money and avoided a recession. The Fed remained vigilant and raised interest rates to fight inflation for most of the year.

Technology Sector led the equity indexes higher on back of the emergence of Artificial Intelligence. Facebook, Apple, Amazon, Google/Alphabet, Microsoft, Nvidia and Tesla, aka the Magnificent 7, were the main contributors for market gains in 2023.

2024 Outlook

The market indexes moved higher into year-end on back of dovish comments from Jerome Powell. The bond markets rallied (lower yields) and priced in six rate cuts for 2024 vs. market expectations for three rate cuts. 

Despite the changes in market expectations for rate cuts in 2024, we remain cautious in our outlook for 2024 due to geopolitical uncertainty, US presidential elections, and extended stock index valuations. The US government budget deficit and record high debt, exceeding $34 trillion, is also worth monitoring. While the Fed can manage short term interest rates, they have little control over long-term interest rates. The US 10-year bond is the benchmark for mortgage rates and bank lending rates.

There are a lot of positives for the US economy as we begin the new year. Interest rates near 30-year highs are providing additional spending power for consumers holding cash balances held at banks. The US consumer continues to be resilient and is spending to support the economy. Corporate balance sheets are well positioned to weather an economic slowdown. Valuations for non-Magnificent 7 stocks both domestically and internationally, we believe, will continue their bullish trend into the new year.

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