Stock Market Insights: Navigating an odd investment quarter: A review of Q3 2023

“That’s an odd quarter.”

Last Monday, my wife and I walked our dog through woods near an old barn to change things up. We find a few coins occasionally but didn’t expect to find some in that seemingly remote spot.

In much the same way, the past investment quarter was odd for the year we have been having.

Stocks, which have been having a good year, lost more than 3% in the third quarter after being dragged down by a terrible September. A negative September wasn’t unexpected since stocks have fallen more than half the time since 1950. This year, September continued its disappointing trend because of rising interest rates and fears of a government shutdown.

It was an odd quarter because there wasn’t much of a performance difference between growth and value investing styles. Though year-to-date, growth is still outperforming value.

Energy was easily the third quarter’s top-performing sector. It was the only positive market sector in September mostly due to higher oil prices. However, as of Oct. 5, oil prices have dropped more than 9% in the past five days and hopefully will continue coming down.

Real estate (-9%) and utilities (-10%) were the worst performing market sectors for the quarter as higher interest rates hurt income-oriented sectors. Real estate continues to struggle, with the average 30-year fixed mortgage rate reaching a 23-year high at the end of last September. The U.S. only slightly outperformed developed international stocks, while emerging markets stocks outperformed them both.

With the overall economic environment, I wouldn’t be surprised if the markets continue to have some volatility this month. I expect the market to be unsettled this month because October is typically bumpy anyway, especially with the possibility of a government shutdown in a few weeks. But overall, I suggest investors stick to their investment plans because I am optimistic about where the market is going.

  • The labor market seems to be going in the right direction, with a better balance between job openings and applicants.
  • Inflation is still too high but coming down. The Fed is probably finished with its most aggressive rate hiking campaign, and the markets are adjusting to the new reality of higher rates.
  • Lastly, the fourth quarter is historically the top-performing quarter for stocks, with an average return of more than 4%.

I like where we are. For one thing, it’s impossible to try to time the market. I like how things are setting up with the Federal Reserve possibly pausing rates next month, leaning toward lower rates soon, and the holiday shopping season fueling the last few months of the year.

A little while after we pocketed the quarter, my wife remembered she had seen online that there was an outside dinner at that old barn a few weekends back. So maybe it wasn’t so odd to find that quarter where a party had recently been. Though remote, that barn still has some odd moments of abnormal people traffic.

I think that is similar to how this year will end up, strong with a few odd months.

Have a blessed week.

Fervent Wealth Management is a financial management and services entity in Springfield, Mo. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Opinions are for general information only and not intended as specific advice or recommendations. All performance cited is historical and is no guarantee of future results. All indices are unmanaged and can’t be invested in directly.

The economic forecast outlined in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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 can be no guarantee that strategies promoted will be successful.

Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.