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3rd Quarter 2023 Market Review Thumbnail

3rd Quarter 2023 Market Review

The 3rd quarter of the year has given investors much to contemplate. Surprisingly strong economic activity combined with wage inflation and higher energy prices led to an increase in bond yields. That proved to be a headwind for stocks, though year-to-date the returns on balanced portfolios remains positive, a sharp contrast to last year.


  • 2023's 3rd quarter proved to be a difficult one for stocks, with the US market down 3.25% and International stocks down 4.10%. 
  • Positive investor sentiment that powered a rally during the first six months faded due to new thinking that interest rates will remain "higher for longer". 
  • While the job market remains healthy and consumer spending remains strong, investors had been counting on interest rate cuts in 2024 to propel stocks even higher. Now the prospect of cuts seems unlikely. 
  • Higher bond yields, at least during the third quarter, prompted stocks' downturn, led by a retreat of the "Magnificent 7" technology stocks.

As of 9/28/23
3Q 2023
YTD 2023
5 Years
US Stocks (1)
12.39% 9.14%
International Stocks (2) -4.10% 6.73% 3.44%
Emerging Markets Stocks (3) -2.93% 1.82% 0.55%
Global Real Estate Securities (4)
-4.54% 0.01%
(1) Russell 3000, (2) MSCI World ex USA net, (3) MSCI Emerging Markets, (4) S&P Global REIT).


  • As the US economy continued to grow despite the Fed's rate increases, bond yields edged higher, with interest rates increasing across all bond maturities in the US Treasury market for the quarter. 
  • The yield on the benchmark 10-year U.S. Treasury ending the 3rd quarter at 4.6%, up from 3.8% at the end of the 2nd quarter. 
  • This .8% increase means the 10-year Treasury is now at it's highest yield in about 16 years. 
  • While bond investors are focused on monthly inflation readings, and the Fed's reaction, the long-term inflation outlook is more subdued. 5-Year forward inflation expectations in the US remain below 3%.
  • The yield curve remains inverted, meaning cash and short-term rates are higher than intermediate and long-term rates.

As of 9/28/23
3Q 2023
YTD 2023
5 Years
US Bonds (1)
International Bonds (2)
(1) Spliced Bloomberg US Aggregate Float Index (2) Bloomberg Global Aggregate ex-USD Float Adj Index (hedged). 

During the last 3 months of the year, some questions appear likely to capture investors’ attention. What’s ahead for the economy in the US and elsewhere? At what point will the Fed pause its rate hikes? How will the conflict in the Middle East be resolved? 

What investors do know is that markets will continue to quickly process information as it becomes available. A long-term plan, one focused on individual goals and built on confidence in market prices, can put investors in the best place for a good experience, whatever may be in store.

David Rappaport, CFP®

David is the Co-Founder of Rappaport Reiches Capital Management.  He acts as personal CFO to entrepreneurs and corporate executives, providing organization and clarity in their finances. Please connect with David below.  He loves to talk about investing, financial planning, and Aspiritech, a non-profit hiring individuals on the autism spectrum.

The author does not intend to provide investment, legal or tax advice as these materials are for general educational purposes only. Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results. Please refer to RRCM’s Form ADV Part 2 for additional disclosures regarding RRCM and its practices.