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Market Update - 3rd Qtr 2023

Only one of the 3 major credit rating agencies still has the US with the highest possible rating, meaning they have a high degree of certainty to meet financial commitments and low degree of default. Narrowly averting a government shutdown over the weekend, reduced the possibility of Moody’s downgrading the US like S&P Global did in 2011 and Fitch Ratings did last month, stating “repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management”.

Economic data suggests a greater probability of a soft landing than a recession, yet this greatly depends upon several factors, such as consumer sentiment and confidence, as well as wage growth further suspending high inflation rates. Last week the Fed announced another hike is likely, which led to deflated stock outlooks and treasury yields spiked.

For the short-term, there is growing sentiment for declines for the larger capitalized companies, especially in the energy, materials, and real estate sectors. More positive outlooks are for the communication services, consumer discretionary, and utility sectors.

Continued market volatility underscores the importance of sticking to your long-term plan, despite the headlines and market noise. History has proven the markets are resilient and can recover; our current environment of pessimism will change and is a matter of when, not if. Tracking performance toward your long-term goals, not short-term performance, can make market swings easier to handle emotionally.

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