Perspectives Newsletter: Q3, 2023
Investors’ euphoric outlook over the rapid government stimulus that followed the implosion of Silicon Valley Bank drove markets higher throughout the first seven months of the year. On July 31, the S&P 500 hit a new recovery high of 4,588.96 carried by the impressive performance of mega-cap growth stocks, especially the “Magnificent Seven.” A gentle decline through August gained momentum in September as markets were confronted with a host of headwinds from sticky inflation to a looming government shutdown to (perhaps paradoxically) a resilient job market and economy. As stock markets were getting their wings clipped, bond yields were exploding to the upside with the 10-year note ending the quarter at 4.6% and the 30- year at 4.7%, higher than they were at the end of June by 76 and 85 basis points respectively. Value and growth stocks saw a near identical return for the quarter only after value outperformed by nearly 160 basis points in September. In an interesting twist during an otherwise “risk off” quarter, Emerging Markets stocks fared better than US and developed international equities.
