October 2023 | Monthly Economic Update
September is historically a challenging month for the stock market, and this year proved no different. Global markets were led lower by rising interest rates and oil prices. US equities continued their August decline, falling 4.8% for the month. International equities fared better than domestic but still posted negative returns.
Within S&P 500 sectors, energy was the sole standout, with 2.6% positive returns helped by supply cuts, which led crude oil prices to their highest levels in more than a year. Interest rate-sensitive sectors of real estate and technology struggled most as bond yields rose. Large-sized companies outperformed the more risk-sensitive small caps, and results were mixed between growth and value styles depending on market capitalization.
The benchmark 10-year Treasury yield ended September at 4.57%, levels not seen since before the great financial crisis of 2008. Surging bond yields led bond prices lower, and US bonds fell 2.5%. Bonds with less interest rate sensitivity, such as short-term US treasuries and high-yield bonds, fared better for the quarter.
Surging oil prices alone were not adequate to hold up the broad commodity index, which declined 0.7%. Precious metals, including gold, fell 4.7% despite a volatile month, detracted from the commodities index as they saw weakness in response to a stronger US dollar. Real estate was among the worst performers for September as it faced pressure from rising rates and cooling economic activity.
With little positive performance across asset classes, balanced portfolios struggled again, with the global 60/40 index blend down 3.6% in September. Broad fixed income and commodities helped relative to the 60/40, while equities, real estate, and gold detracted from returns relative to a balanced portfolio.
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What word can be added before or after these words to make a new word or phrase?
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