Economic Update 2023

April 2023
1st Quarter Economic Update   

Markets ended a volatile but positive first quarter, with gains in technology offsetting weakness in banks. The quarter also saw a reversal in many of 2022’s underperformers. Technology and its related sector enjoyed strong gains highlighting investors’ willingness to look beyond near-term challenges. The expectation that the Fed would need to cut interest rates to curtail the banking crisis sent the technology sector up 21.8% for the quarter, while economically sensitive sectors such as energy and financials suffered losses amid the banking turmoil and recession fears. Financials, the worst-performing sector, fell 5.6% for the quarter.

Across size, bigger stocks did better and within style, growth trounced value. Large caps (S&P 500) rose by 7.5% and outperformed small caps (S&P 600), which only rose by 2.7%. This divergent performance can be attributed to the fact that the small-cap index has larger regional bank stock exposure and a lower weight of technology stocks. Finally, across style, Nasdaq, a heavy growth and technology-oriented index, gained 17%, while Dow Jones 30, a value-oriented index often synonymous with dividend payers, was up merely 0.8%.      

Bonds recovered in the first quarter after suffering their worst year in history in 2022. Bond yields, which move in inverse to bond prices, fell as markets anticipated the Fed to pause and or cut rates following the banking debacle. US fixed income gained 3% for the quarter. Longer-dated treasury bonds fared the best, up 6.2%, while short treasury gained 1.1%. Lower quality bonds, such as high yield, were also surprisingly resilient and gained 3.6%.

We are pleased to bring you this brief quarterly market recap. If you have any questions about your portfolio, or your circumstances have changed that would dictate a planning review, please call our office to make an appointment. It is our pleasure to assist you in your planning and portfolio management.
 

Sincerely,
 

Timothy G. Redmond, CFP®, AIF® MSFS
Financial Advisor
CA Insurance License: 0687279

Investors cannot invest directly in indexes. The views stated in this letter are not necessarily the opinion of SagePoint Financial, Inc.and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards. A diversified portfolio does not assure a profit or protect against loss in a declining market.
 

This report is for informational purposes only, and is not a solicitation, and should not be considered investment advice. The information in this report has been drawn from sources AssetMark believes to be reliable, but its accuracy is not guaranteed, and is subject to change. Investing involves risk, including the possible loss of principal.

This material was prepared by AssetMark Trust, Inc., figures by Morningstar Inc. They do not necessarily represent the views of the presenting party, nor their affiliates. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not beconstrued as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such.
 

The MSCI ACWI (All Country World Index) is a free float‐adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.
The Bloomberg Barclays Global Aggregate Index is a measure of global investment grade debt from 24 local currency markets. This multi‐ currency benchmark includes treasury, government‐related, corporate and securitized fixed‐rate bonds from both developed and emerging markets issuers.
 

The Standard & Poor's 500 Index ‐ S&P 500 is a market‐capitalization‐weighted index of the 500 largest U.S. publicly traded companies by market value. The S&P 500 is a market value or market‐capitalization‐weighted index. The MSCI ACWI Ex‐U.S. is a market‐capitalization‐weighted index maintained by Morgan Stanley Capital International (MSCI). It is designed to provide a broad measure of stock performance throughout the world, with the exception of U.S.‐based companies. The MSCI All Country World Index Ex‐U.S. includes both developed and emerging markets.