Gateway Financial Partners



September 2023 | Monthly Economic Update

Source: FactSet

Equities pulled back in August, with volatility back on the rise. Notable events driving the market volatility were a US credit downgrade, China continuing to experience worsening economic conditions, and uncertainty on future Federal Reserve monetary policy decisions as a result of persisting inflation. US equities, as measured by the S&P 500, saw their first monthly decline since February, dropping 1.6%. International equities fared worse, with international developed and emerging market equities down 3.8% and 6.1%, respectively. Bleaker economic conditions in these regions, as well as the US dollar strengthening during the month, posed headwinds for both international markets.

Looking across US equity sectors, only the energy sector saw positive performance in August, with a gain of 1.81% as energy prices rose in response to ongoing production cuts from OPEC and potential impacts from Hurricane Idalia affecting production in the Gulf. Utilities fared worse for the month, declining 6.16%, in response to rising energy prices and interest rates. Comparing equity styles, growth outperformed value and large outperformed small as the narrow technology leadership of the “magnificent seven” stocks remain a dominant theme of the year, and more defensive, interest rate-sensitive sectors continue to be challenged.

Moving to fixed income, all broad markets were in negative territory. US bonds fared best with the broad market declining 0.6% despite the US seeing its credit downgraded from the highest credit rating, AAA, down one spot to AA+, and persisting inflation, leaving more room for potential future rate hikes. While these events triggered volatility within fixed income, a strengthening US dollar provided a boost to domestic bonds relative to international bonds that saw larger declines with backdrops of weaker economies. Shorter-duration government bonds and high yield outperformed longer-duration government bonds due to less interest rate sensitivity.

Despite a strong month for energy, commodities broadly saw a decline of 0.8%. Industrial and precious metals were the detractors from the index. Gold dropped -1.7%, even with a volatile month as a result of the strengthening US dollar. Real estate pulled back after a strong July, with US REITs declining 2.7% for the month.

Balanced portfolios struggled in August, with the global 60/40 index blend down 2.2%. Relative to the 60/40, broad allocations to bonds, commodities, and gold helped while equities and real estate hurt. 

Source: FactSet

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Important Information
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.

Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation.

It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.

Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.

Bloomberg® and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, “Bloomberg”) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.

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