Financial Market Commentary

Monthly Market Commentary

September 2023 Edition

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

September Investment and Economic Commentary

Welcome to September.  August turned out to be the Dog Days of Summer as far as the markets were concerned.  Almost across the board, indices were down as investors and market strategists attempted to decipher the high-level economic data that showed a strong US economy, a tight labor market, and no sign of a change in the path of interest rates.  Non-US markets provided no relief to investors as stocks sold off modestly across the regions.  Overseas markets also saw improved breadth across most countries and regions.  In the fixed income markets, interest rates trended higher through much of the month with the 10Yr Treasury ending 14 bps higher. 

Here are a few highlights from what occurred across the public markets during the month and quarter.


  • The S&P 500 was down 1.6% in August and is up 18.7% for the YTD.  
  • The Bloomberg Aggregate Bond Index was down -0.64% in August and is up 1.4% for the YTD.         

Domestic Equity

  • Despite a rally in the last week of the month, all domestic equity styles and market caps finished August in the red. Recent commentary from central bankers clouded the hopefulness of a soft landing and bolstered the narrative that the Fed may have to keep rates higher for a longer period of time to tame inflation.
  • Growth stocks outperformed value in August as tech companies rallied later in the month, including Nvidia reaching a record high. Small cap stocks continue to underperform YTD, trailing large cap and mid cap stocks in August.

International and Global Equities

  • Like US stocks, foreign developed ended in the red in August, snapping their winning streak of posting positive returns since May. Japan continues to be among the best performing developed countries.
  • Emerging markets lagged behind developed markets, primarily due to volatility in China's property sector and concerns about overall economic growth.     

Fixed Income Markets

  • The majority of the bond market indices delivered negative returns in August. Strong US economic growth and higher rates helped advance high-yield corporates to positive returns this month. 

Specialty Markets

  • In August, REITs experienced negative returns due to escalating vacancy rates and the lingering repercussions of the pandemic, both of which have compounded challenges for the sector.

US Equity Sectors

  • Energy was the lone sector that produced positive returns as tightening inventories lifted crude oil prices.

September 12, 2023

Dear Valued Investor,

Financial markets lived up to their reputation during the month of August, which has a record for being difficult. On the first day of August, markets had to contend with a downgrade of U.S. long-term debt by the rating agency, Fitch. They attributed the adjustment to the “expected fiscal deterioration over the next three years, a high and growing general debt burden, and the erosion of governance.” Many financial leaders characterized the downgrade as “ridiculous,” but the stock and bond markets still felt the effects.

Another setback for markets came from Moody’s, an important credit agency. They issued a credit downgrade for 10 small-to-medium-sized banks and 11 larger banks, with a warning of increasing financial risks in the form of higher interest rates, escalating funding costs, and rising risks from banks’ commercial real estate holdings.

Still, despite the credit-related downgrades, markets were able to navigate their way through the ongoing debate of the country’s financial strength. Better than expected earnings reports, coupled with an optimistic outlook, helped underscore the overall durability of corporate America. That durability showed up in a couple of ways:

-The unemployment rate in the U.S. was at a multi-decade low of 3.5%, so consumer spending has remained resilient. Back-to-school shopping was strong, which is a positive signal for holiday sales.

-The housing market defied higher mortgage rates, as the low inventory of houses on the market supported elevated prices. The National Association of Realtors’ chief economist noted that with a strong labor market, the pool of prospective buyers has been enlarged, but with rising mortgage rates and limited inventory, the possibility of home purchases may be “hindered for many.”

Resilience aside, the market still experienced some volatility with a pullback in the stock market and high bond yields—specifically the 10-year Treasury. Reports of consumer confidence and the number of available job openings also came in softer than expected, which helped alter expectations that the Federal Reserve (Fed) would raise rates again this year. Although the debate over the need for another rate hike continues as the Fed monitors incoming data, the equity markets responded decisively and resumed their march higher at the end of the month.

So, where does that leave the market through year-end, especially since September historically tends to be another difficult month? Since 1950, a strong market performance in the first seven months of the year has been followed by average returns of 5% until year end. Given that the S&P 500 enjoyed a 19% gain for the first seven months of the year, we may be positioned for a positive end to 2023, although potentially with some bumps along the way.

Thank you for your trust in your financial future.


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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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