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ECONOMIC UPDATE

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January 2024 | Monthly Economic Update

Source: FactSet

Markets finished the year strong, with positive returns across most major asset classes in December. Investors reacted positively to the Federal Reserve’s dovish comments regarding monetary policy, with interest rate cuts potentially coming sooner in 2024 rather than later. Among major regions, international developed equities led December with a gain of 5.3%, followed by US equities up 4.5% and emerging market equities up 4.0%. Emerging markets were held back by China, with growth concerns persisting as China’s index fell 2.4% for the month and about 11% for the year.

Sector performance in the US was nearly all positive, with only energy falling narrowly in the negative. Oil was a driving factor for energy’s underperformance, with demand concerns looming as well as strong supply being provided by non-OPEC producers. Real estate and other interest rate-sensitive sectors saw the strongest returns as the market priced in rate cuts in 2024. Small-cap and value stocks had a strong month in response to lower potential interest rates as well, outperforming their large and growth counterparts, which were dominant for most of the year.

After a volatile 2023, bonds closed out the year with positive performance, with most major indices seeing gains in December. Gains were driven by expectations of rate cuts, a weakening dollar, and tightening credit spreads. Longer-dated bonds and credit-risky bonds, such as corporate and high-yield bond classes, had the strongest relative performance for the month.

Commodities were one of the few areas of weakness in December, with the broad index falling by 2.7%. Despite gold and industrial metals posting positive returns, most other commodity indexes faltered, with soft commodities like agricultural products and energy leading the decline. REITs, gaining 9.2%, saw some of the strongest performance in December with the prospect of rate cuts.

Source: FactSet

The Monthly Riddle

What’s right and never wrong?

LAST MONTH’S RIDDLE: What must be in the oven yet can not be baked?
Grows in the heat yet shuns the light of day?
What sinks in water but rises with air?
Looks like sand, but is fine as hair?

ANSWER: Yeast

Tip of The Month

Consider scheduling a consultation with your financial advisor early in the year. This can be a helpful step in assessing your financial situation and exploring potential goals for the 2024.

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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