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March 2023 Market Commentary: The More Things Change, The More They Remain The Same

February Recap and March Outlook

If there's a pithy saying that encapsulates February, it would be "The more things change, the more they remain the same." Markets have started to take Federal Reserve Chairman Jerome Powell's warnings seriously, and have finally caught up to the consistent messaging from the Fed. Yields went up, bond prices fell, and equity markets have come to terms with the fact that the pivot is nowhere in sight.

What does this mean for the economy? Despite unprecedented rate hikes in 2022, inflation remains stubborn this year, just as it was last year, and the labor market remains strong. This leaves the Fed with even less room to maneuver a soft landing.

Equity Markets in February

  • The S&P 500 was down 2.61%

  • The Dow Jones Industrial Average fell 4.19%

  • The S&P Mid-Cap 400 decreased 1.95%

  • The S&P Small-Cap 600 decreased 1.35%

Source: S&P. All performance as of February 28, 2022

The January rally reversed as only one of eleven sectors gained. Information Technology was the stand-out performer with a just-barely-positive result of 0.29%. Earnings season for 4Q is largely complete, with 480 issues reporting and 67.3% beating estimates on earnings and 65.3% beating estimates on sales. As a whole, Q4 2022 is expected to be down 1.7% from Q3 2022.

Bond Markets

The 10-year U.S. Treasury ended the month at a yield of 3.93%, a sharp increase from 3.50% in January as equity markets declined and investors moved to a more risk-off stance. The 30-year U.S. Treasury ended February at 3.92%, up from 3.63% last month. The Bloomberg U.S. Aggregate Bond Index ended February down 2.58%. The index continued the trend of positive correlation between the equity and bond markets.

The Smart Investor

We’ve spent the last several years with the markets reacting – and overreacting – to data from every corner of the economy.

That’s not likely to change, but as an investor, a better approach may be to focus more on goals than gains. As we enter tax season, it’s a good idea to rethink your tax strategies and see if there are ways you can maximize your tax efficiency for next year.

There are some tactical things you may want to think about:

  • Asset prices are still low. Roth conversions remain an effective strategy to create tax-free income in retirement and simplify estate planning

  • We’re still in for volatility. Diversification across asset classes is one of the few ways to insulate your portfolio. With the broad swing in asset values, your portfolio may have moved from the guidelines you set up. For both taxable and retirement accounts, it’s a good idea to review your allocations, even if looking at your overall balance is unpleasant.

Being very clear about your goals can help you ride out market uncertainty and volatility. What do you want to get from your investments in the next five, ten, or twenty years? How do you want your life to look? Taking the time to reset goals and ensure that your financial plan is on track can keep you focused and invested, so when the market turns, you’re there to capture the gains.


The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA

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