The 3-minute quarterly updated and insights for quarter 3 of 2023.
After surging in the first half of 2023, markets lost ground in Q3 as investors snapped out of their optimism as worries about the economy began to bite. Is a recession coming? Is a bull market out of reach? Let’s take a look at what happened in Q3 and what might happen in the
final three months of the year.1
Key Takeaways
What conclusions should we draw from a rocky third quarter?
Progress is not linear. Though worries about the economy dogged markets this quarter, all is not lost. There is plenty to be optimistic about. The economy is still chugging along, and the labor market continues to show strength. The major challenge ahead is that the Fed must maintain a delicate balance between keeping interest rates high enough to fully douse inflation while not triggering a recession.
Until that job is done, markets are likely to respond with volatility to any news that points to higher interest rates.
Will we still see a recession in 2023?
That’s hard to say because by the time we know the answer, we’ll likely already be in 2024. Plenty of economists believe that the risk of a recession is low. Others see red flags and think that we won’t be able to avoid a recession this year or next. We’ll just have to wait and see which prediction is correct.
Bottom line: we’re watching the data, staying flexible, and looking for opportunities. Questions about markets or your portfolio? Please reach out. I’d be happy to chat.
Looking Ahead
Here are just some of the factors we are watching in the weeks and months ahead.
Interest Rates
The Federal Reserve has indicated that it plans to raise rates once more in 2023. The expectation of higher rates is likely to impact markets.2
Economic Data
Investors will be closely watching reports on housing, labor, consumer confidence, and other sectors for clues about the economy’s health and future Fed moves.
Recession Indicators
Opinions as to whether the economy is slipping into a recession remain mixed and recession fears have potential to stoke market volatility.3
U.S Politics
Repeated fiscal showdowns in Washington and the ramp-up of 2024 election news could inject some extra uncertainty about politics.4
Retail Spending
The holiday shopping season is critical for retailers so investors will be monitoring trends for insights about consumer spending.
Markets may have had a weak third quarter, but it’s very possible investors could regain their optimism in Q4.
Sources:
1. https://www.cnbc.com/2023/09/28/stock-market-today-live-updates.html
2. https://www.reuters.com/markets/rates-bonds/feds-bowman-says-more-rates-hikes-needed-ensure-timely-inflation-control-2023-09-22/
3. https://www.cnbc.com/2023/09/05/recession-indicator-may-be-broken-odometer-for-economcy-says-expert.html
4. https://www.reuters.com/markets/us/us-election-looms-investors-fear-fiscal-peace-mike-dolan-2023-10-04/
5. https://finance.yahoo.com/news/jobs-report-stunner-us-economy-creates-336000-jobs-in-september-nearly-twice-the-number-expected-123822203.html
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