2023 Fourth Quarter Commentary: Economic Recap & Market Summary

After a challenging start to the final quarter of the year, markets surged to life with the Fed announcing at least three planned rate cuts in 2024. The robust finish left most traditional asset classes with strong returns for 2023, surprising even the bulls, as many entered the year predicting a recession. Aside from the mini-banking crisis in March, the economy remained remarkably robust throughout the year, boasting low unemployment, steady growth, and an improving inflation outlook. Neither consumer nor federal spending shows any material signs of moderating. As we embark on a new year, our latest quarterly commentary offers insights into our perspectives on various asset classes and the direction we anticipate the economy and markets may take in 2024.


  • The stock market had a phenomenal year, with the S&P 500 delivering an 11.64% return for the quarter and 26% for the year. Meanwhile, bonds reversed course, delivering 6.69% for the quarter and 5.59% for the year, while the 10-year U.S. Treasury ended the year at 3.88%.
  • Economic growth remains robust, with third-quarter GDP increasing at a rate of 4.9%, driven by a rebound in consumer spending and ongoing fiscal spending. While inflation appears relatively favorable, job growth has slightly moderated, and the housing market continues to face challenges.
  • Heading into 2024, we anticipate a more favorable fixed-income investing environment, focusing on credit as regional banks have receded from lending markets, creating opportunities for private and alternative lenders.
  • Despite the market’s strong performance in 2023, concerns arise from the top 10 stocks contributing 75% of the S&P 500’s return, prompting considerations about valuations and the need for new catalysts beyond A.I. Regardless of the market’s trajectory, we remain committed to our value and quality-biased positioning.
  • Alternative investments showed mixed performance last year, with strategies like structured credit and private corporate credit delivering strong returns while trend-following and managed futures faced challenges. Looking ahead, maintaining a diversified portfolio of alternatives remains imperative.
  • We look cautiously into 2024 after an unexpectedly positive market performance in 2023, acknowledging widespread optimism while also remaining wary of uncertainties, including geopolitical tensions, regional conflicts involving major economic powers, a complex U.S. election year, and ongoing deglobalization trends.



Commentary Contributors:

Johann Lee, CFA®
Director of Research


Eric Gerster, CFA®
Chief Investment Strategist


Edward J. Durica, III, CFA®
Senior Wealth Advisor


Juliana Guerra, MSF
Investment Research Analyst

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