Weekly Market Commentary

Update to the Dot Plot

Posted on September 25, 2023

Market Commentary by Mitchell Wood, Larson COO

The declines in the Major Markets continued last week as all five indices ended in the red. For the Nasdaq and the S&P 500, the losses marked the third consecutive week of declines.

These losses have hung over the month of September and played into seasonality sentiments. Going back to 1950, September has been known as the month with the lowest average monthly return. While seasonality has its proponents as well as its detractors, at least for 2023, the monthly performance has lined up with historical patterns. As of Friday’s close, this September sits with a loss of 4.16 percent.

The bearish sentiment was consistent across the S&P 500 sectors as all 11 segments ended lower.

While there isn’t always a clear indication of the cause and effect within the equity market, last week’s market losses were driven in large part from a shift in sentiment around interest rates. Mid-week, the FOMC met and reaffirmed the current target range for the Fed Funds Rate.

Major Markets

YTD as of 9/22/2023  
  Dow Jones Industrial  
  S&P 500  
  MSCI World  
  Russell 2000  
  Bar US Agg Bnd  

S&P Sectors

  YTD as of 9/22/2023
  Comm. Services  
  Cons. Discretionary  
  Cons. Staples  
  Health Care  
  Info. Technology  
  Real Estate  
    Agent/Broker Dealer Use Only  
However, one of the developments from this meeting was the guidance for interest rates in 2024.
The FOMC released an update to their dot plot which saw median estimates for next year shift from 4.6 percent in June to 5.1 percent, effectively holding these interest rates at this elevated level well into next year.

This added to the rising pressure on interest rates which had carried over from the prior week. The yield curve saw the longer end of the curve rise higher as the intermediate to longer-term durations rose 11 to 12 basis points. This reflected a 25 to 35 basis point increase in the yield as of Friday compared to the end of last month.

The rise in interest rates saw the Bloomberg Barclay aggregate bond index shed another 50 basis points. As a result, the mainstay domestic bond index sits back in negative territory for the year at Friday’s close.

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The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries. https://us.spindices.com/indices/equity/sp-500

The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities. https://us.spindices.com/indices/equity/dow-jones-industrial-average

The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 2,500 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes. https://indexes.nasdaqomx.com/Index/Overview/COMP

The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets.

The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017, it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country. https://www.msci.com/

The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market. https://us.spindices.com/indices

Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®). https://us.spindices.com/indices

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