Financial Market Commentary

Monthly Market Commentary

December 2023 Edition

These monthly market commentaries share a synopsis of the U.S. financial markets with intelligent insights.

December Investment and Economic Commentary

Season’s Greetings Everyone!

After three straight months of negative returns in the equity and bond markets, both have reversed their direction of travel in the second half of 2023. 

All of the major market segments delivered very favorable returns in November, boosted by optimism that the inflation fight may be nearing its end, and the Fed may start looking to cut rates by mid-2024 to keep growth on a positive trajectory. 

Many equity markets in the US and abroad were up 8 - 10+% with smaller and midcaps matching or outperforming their big cap peers. 

The bond market benefitted significantly from the 50bp decline in the UST10Yr rate.  To say the bond market needed a boost is an understatement as the Bloomberg Aggregate Bond Index had declined for six straight months before its 4.5% jump in November. 

Now one month does not make a trend and there are some warning signs showing up in the data that may signal the economy is slowing. 

Here are a few observations about what occurred across the public markets during the month.


  • The S&P 500 was up 9.1% in November, bringing the trailing 3-month return into positive territory at 1.7%.  YTD, the index is up 20.8%.
  • The Bloomberg Aggregate Bond Index was up 4.5% for the month, lifting the trailing 3-month return into positive territory at 0.3%.  YTD, the index is back on the positive side at 1.6%.

Domestic Equity 

  • Domestic equities snapped their three-month losing streak, posting positive returns across all styles and market caps. The S&P 500 delivered one of its best Novembers on record due to data showing inflation is on its way down and beliefs that the Fed is done hiking rates and will start cuts in by mid-2024.
  • Mid Cap stocks outperformed large-cap and small-cap stocks, marking the first time this year mid cap has been the best-performing market cap segment. Growth outperformed value as the falling yield helped boost sentiment for many sectors, specifically Information Technology. 

International and Global Equities 

  • Foreign stocks had sizeable returns, on par with the US in November with strong returns in most regions. Growth outperformed value at comparable levels to the US.
  • Emerging markets stocks rallied, boosted by a weakening of the US dollar.  Chinese stocks missed out on the majority of the rally due to persistent worries about its economic recovery.

Fixed Income Markets 

  • The narrative that the Fed is done with hiking rates and inflation is slowing fueled one of the strongest months for bond markets since the 1980s. Treasuries, Agencies, mortgages and corporates rallied, providing a needed boost to bond investors. 

Specialty Markets 

  • REITs had a great month in November, generating a +10% return as valuations rose while still carrying strong dividend yields. Commodities were hurt by falling oil prices. 

US Equity Sectors

  • Among the 11 major sectors of the S&P 500, Energy was the only negative sector, while Information Technology was the best-performing sector, led by Nvidia.

Dear Valued Investor,

Solid gains for both stocks and bonds gave investors a November to remember. As financial markets continue to defy skeptics, I’m reminded of a quote from Warren Buffett’s long-time partner and one of the greatest investors of our time, Charlie Munger, who passed away last week. “The world is full of foolish gamblers, and they will not do as well as the patient investors.” We couldn’t agree more at LPL Research. Patient investors have been rewarded in 2023 and will continue to be.

Increasing confidence in a soft landing for the U.S. economy has shifted the focus away from rate hikes and toward eventual cuts, helping to pull long-term interest rates down and encouraging market participants to pay higher prices for stocks relative to expected earnings.

A good start to holiday shopping season supports the soft landing narrative. Online sales since Black Friday are up 5% over the same period last year according to Adobe. Lower prices at the pump, falling goods prices, higher stock values, and rising wages should help keep the momentum going.

The other key piece of the soft-landing equation, inflation, is well on its way to the Federal Reserve’s 2% target. Remarkably, the preferred inflation measure, the core personal consumption expenditures (PCE) deflator, rose at just a 2.2% annualized pace over the past three months, down from 5.3% in the year prior.

Looking ahead, we think the combination of corporate America’s solid fundamental foundation and the support from lower interest rates sets the stage for more stock gains in the coming year. The slowing economy will help ease inflation. Less inflation will help promote interest-rate stability. And earnings are entering their sweet spot following an excellent third quarter earnings season.

Sure, there are risks. Some of the impact of higher rates is yet to come. Consumers have drawn down most of their excess savings. U.S. government debt is getting more expensive. Wars overseas have heightened geopolitical risk ahead of what will likely be a divisive 2024 U.S. presidential election.

But as Mr. Munger told us, patience will be rewarded. No one knows exactly what will happen through the end of the year, but history shows that stocks tend to produce above-average gains in December and rise much more often than they fall—even after strong gains the month prior. This would be a fitting end to what’s truly been a remarkable year.

All of us at Connor & Gallagher OneSource wish you a wonderful holiday season. As always, please reach out to me or our team with questions.

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Scott Krase
Wealth Manager
Connor & Gallagher OneSource (CGO)

Securities offered through LPL Financial, Member FINRA & SIPC.  Investment advisory services offered through Global Retirement Partners, LLC DBA Connor & Gallagher OneSource, an SEC registered investment advisor.  Connor & Gallagher OneSource and Connor & Gallagher Benefit Services are separate entities from LPL Financial.

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of August 3, 2022.

All index data from FactSet.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. Connor & Gallagher OneSource doesn’t provide research on individual equities. All information is believed to be from reliable sources; however Connor & Gallagher OneSource makes no representation as to its completeness or accuracy.

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