A topsy turvy year ended on a strong note, thanks to a very good closing kick in November and December. Bonds rallied sharply from what had been a slightly negative year to date late October position, and historic drop in 2022. Measured by the inclusive U.S. Aggregate (AGG) index, bonds posted a 6.8% fourth quarter gain, bringing the year to +5.7%, thus offsetting part of their 13.0% loss in 2022. Stocks also surged, essentially erasing their big 2022 losses. The All-Country World Index (ACWI) gained 11.0% and 21.2% in the quarter and year, the latter figure almost making up for an 18.2% 2022 drop.

Stocks and bonds both retreated in the third quarter, respectively reducing and reversing year-to-date gains. A September stock sell-off more than offset gains from the prior two months, with the ACWI world stock index posting a 2.7% quarterly loss after a 4.3% drop in the final month. Modest bond losses in the first two months became much more significant by quarter-end, as the broad AGG index lost 3.0% in the three months after a 2.5% drop in September. Year-to-date, the ACWI is still up 9.9%, while the AGG is down 1.0%.

Stocks posted strong returns in the second quarter, building on first quarter gains and creating a very solid first half of 2023. The S&P 500 index posted an 8.7% gain in the recent three months, bringing its six-month rise to 16.9%, and crossing a bull market (20%+) threshold from its October lows. The inclusive world measure, the ACWI, posted 6.3% and 14.2% gains over the three and six-month periods.

The opening quarter of the year finished with gains for both stocks and bonds, on the heels of significant losses in 2022. The inclusive all-country world index (ACWI) and S&P 500 index gained 7.4% and 7.5%, respectively, while the AGG bond index rose by 3.2%.