Market Recap: February 2023

Market commentary

• 4th quarter U.S. GDP was revised downward to 2.7% from a preliminary reading of 2.9%; lower growth is expected in 2023
• Unemployment rate declined further to 3.4%
• Consumer confidence declined to a 3-month low, as worries about inflation and the economy abound

Select economic and market data

Equities

• Stocks sold off in February as inflation readings came in higher than expected and bond yields rose
• Information technology was the only sector in the S&P 500 to post a gain in the month, while the energy sector declined more than 7%
• Q4 earnings season is almost over, with revenues coming in above forecasts but earnings coming in lower than expected

Fixed income

• Bond indices declined as rates increased once again
• The Fed raised rates by 25 basis points in early February and indicated that further increases are anticipated, tempering hopes for a cut by the end of the year

Strategic outlook

• Above-average volatility is likely to persist given inflation debate and heightened central bank involvement
• Some caution is warranted on equities in the near-term; currently favoring small-cap and mid-cap domestic stocks
• Incrementally extending duration in the fixed income portfolio as the intermediate part of the curve is becoming more attractive