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Q4 2023 Market Review

If you prefer to listen, you can click below and follow along with our audio recording of this review.


After the pullback in the third quarter, equity and fixed-income markets performed strongly during the fourth quarter. The gains during the quarter pushed all major asset classes to positive returns for 2023. US and developed market stocks were up over 10%. Emerging markets stocks lagged their developed counterparts yet still gained nearly 8%. Fixed income gained in the mid-single digits.

The Federal Reserve held the federal funds rate steady during the quarter, citing inflation trending in the right direction, overall robust (yet slowing) economic growth, and a strong employment environment. Despite many calls for a recession coming into 2023, it appears the chances of a “soft landing” (if the Fed can bring inflation under control without a meaningful recession) have improved dramatically.

After a volatile year for interest rates, the US 10-Year Treasury ended 2023 almost exactly where it started. Despite briefly reaching 5%, the 10-year yield started and finished the year just under 4%. With bond prices gaining as rates fell, the decline in rates drove the rally in bond performance during the quarter.

Market expectations are indicating the tightening cycle is likely behind us and that 2024 may see the Federal Reserve begin to ease monetary policy as inflation slows and other economic data points indicate continued strength in the economy.

US Stocks

US stocks rallied strongly in the fourth quarter as data and expectations began to point towards a sooner end to central bank tightening, and an increased probability of rate reductions earlier in 2024. Despite the unease and many negative headlines throughout the year, 2023 rewarded investors with strong returns. While more muted during the quarter, large-cap growth stocks clearly retook the lead after 2022.

International Stocks

Developed international gained 10.4% during the quarter (as measured by the MSCI EAFE Index), and emerging markets gained 7.9% (MSCI Emerging Markets Index). Over the past year, developed international markets have gained a solid 18.2% (MSCI EAFE). Emerging markets gained a respectable 9.8% (MSCI EM), while being weighed down by weaker than anticipated results in China.

Fixed Income

Within fixed income, after generally trending lower throughout the earlier part of the year, rates pulled back (and prices rebounded) during the fourth quarter, bringing returns for the major bond sectors into the mid-single-digit range. More credit-sensitive sectors (like corporate bonds) have generated the highest results for the quarter. Over the past year, hedged international bonds showed the benefits of global diversification and outpaced the US bond market. For investors in tax-sensitive portfolios, municipal bonds have been one of the strongest sectors over the last year, with even stronger relative results when compared on an after-tax basis.

Parting Thoughts

While it is arguably a somewhat arbitrary timeframe, the marking of the end of a year and the beginning of a new one triggers a tradition of reflection and contemplation. The illustration we chose to share this quarter comes from Avantis Investors and is titled: “The Stories of 2023”. It helps put some perspective on the last year and, once again, highlights the reward potential for those who stay disciplined and tune out the short-term noise in markets.

It is difficult to put ourselves back to the beginning of 2023. Back before the bank failures of Silicon Valley Bank, First Republic, and Credit Suisse to name a few. Back to when calls for an impending recession were everywhere. Back before four further quarter-point rate hikes by the Federal Reserve. Back when inflation was running at 7% (CPI), we had just passed through the worst year ever for fixed-income investments.

Anxieties were high, and outlooks gloomy. Yet, despite it all, investors who stayed disciplined and patient were rewarded in 2023. 2024 will no doubt contain significant headlines and news that we cannot begin to predict. However, we can be certain there will be plenty of headlines that will tempt us to stray from our long-term investment plans. While easier said than done, preparing for an unknown future is a far better approach than reacting to it.


Each quarter, Collective Wealth Planning, with the help of our investment partner First Ascent Asset Management, provides transparency and seeks to clearly communicate what is driving performance for portfolios. However, as long-term investors we believe it is important to note that any single period (especially a period as short as a quarter) can be skewed or limited in informational value and stress the importance of the longer-term perspective on portfolio positions. 

Investments are not guaranteed and are subject to investment risk, including possible loss of the principal amount invested. Past performance is no guarantee of future results. All allocations and opinions expressed are as of the date of this presentation and subject to change. The information contained herein does not constitute investment advice or a solicitation. Information obtained from 3rd parties is believed to be accurate, but has not been independently verified.