Jordan Daugherty, Investment Analyst, presents our January video market update and shares how FSA is responding.
February 2023 Stock Market Update Transcript
Hello, I’m investment analyst Jordan Daugherty, and this is your February market update. The year’s off to a good start. We’ve experienced robust advances in both stocks and bonds, and the Investment Team has started repositioning portfolios to benefit from a more bullish environment. Last year’s performance saw stocks and bonds show an unusual amount of correlation to the downside, so the reverse is now proving true, luckily, with this current rally. From junk bonds all the way to small cap stocks, the markets are experiencing a broad recovery. Leading the way up was a renewed strength in growth stocks. As you can see here, the NASDAQ composite gained more than 10% for the month. This was on the heels of a 30% decline in 2022, so there’s been a long way to go to get back to normal. For a real breath of fresh air, investment grade corporate bonds have rallied over 5%, while the USAG posted almost a 3% gain.
Now let’s take a look at how sectors have performed. Eight of the eleven S&P sectors were up in January. Last year a silver lining for investors was the energy sector, but now last year’s best performers are among the weakest, so as energy and defensive areas such as utilities, consumer staples, and healthcare take the backseat, we’re seeing strength build up in retail and technology stocks. Twenty twenty two was a severe reversal from 2021’s performance and became one of the worst bear markets that we’ve seen. Stocks and bonds moved together in a way most investors had never seen with bonds plunging further than any year on record. It’s not necessarily an easy time to be bullish.
The US has endured mixed economic data as of late but was recently surprised on the upside with the lowest unemployment figure that we’ve seen since 1969. Inflation, on the other hand, remains an issue. Headline inflation is down from its June 2022 peak of over 9%, yet it’s persisting at an elevated 6.5%. So one thing hasn’t changed at the start of 2023: All eyes remain on the Fed and what they’re planning to do with the future of rate hikes.
We will continue to increase stock and bond allocations as evidence of these price trends continue to improve. The Investment Team is always in search of promising pockets of the market and has recently added foreign stocks, precious metals, and high quality dividend stock funds to the appropriate strategies. Some of our more defensive holdings are now under pressure, and these will be sold off as they trigger the FSA safety nets. That’s it for the market update.
I’d like to thank you for watching, and we’ll see you next time.
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