Quarterly Market Outlook
The S&P 500 ended the second quarter and first half of 2023 at a 14-month high and most major stock indices logged solid gains in the second quarter following a pause in the Fed’s rate hike campaign, stronger-than-expected corporate earnings (especially in the tech sector) and the relatively drama-free resolution of the debt ceiling.
Below are highlights of the 2nd Quarter (Q2) and our investment committee’s outlook for the 3rd Quarter of 2023 (Q3). Links will take you to our brief or expanded discussions, if interested.
2nd Quarter Wrap
Markets were impressively resilient in the second quarter and throughout the first half of 2023, as better-than-feared earnings, expectations for less-aggressive central bank rate hikes, more evidence of a “soft” economic landing, and relative stability in the regional banks pushed the S&P 500 to a 14-month high.
ECONOMICS: Long-term Inflation
Will the Fed Get to 2% or Will it Change the Target?
Once highly-expansive fiscal policy and consumer demand normalize, inflation should return to the Fed’s long-term target.
2nd Quarter Performance
Witnessed an acceleration of the tech sector outperformance witnessed in the first quarter, as “AI” enthusiasm drove several mega-cap tech stocks sharply higher.
Bonds realized a slightly negative return as the resilient economy and hope of a near-term end to Fed rate hikes led investors to embrace riskier assets.
POLICY: The End of Globalization?
A trend of reindustrialization and de-risking will be a market theme that investors will navigate in the years ahead.
New US government policies create challenges and opportunities for investors navigating the shifting global environment.
3rd Quarter Market Outlook
Inflation should continue to decline.
Reduced lending by regional banks poses a threat to commercial real estate markets and small businesses.
Clearly there have been positive macro developments so far in 2023 that have helped the stock market rebound. However, it’s important to remember that multiple and varied risks remain for the economy and markets.
STRATEGY: India: Is Geography Destiny?
India has a shared security interest with the United States in limiting China’s power and influence.
An increasingly self-assured India recognizes its position in the world and is prepared both to unlock and harness its economic potential.
Authenticity
Trust
Competence
Caring
Connecting
Balance
Focus
Closing Note
We remain focused on both opportunities and risks in the markets, and we thank you for your ongoing confidence and trust. Please rest assured that our entire team will remain dedicated to helping you successfully navigate this market environment.
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