2023 in review: Rates, rallies and reflections (2024)

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2023 in review: Rates, rallies and reflections? ›

2023 year-to-date, USD, percentage. This chart shows returns in 2022 and 2023 year-to-date (YTD), across asset classes. For U.S. Equities, the 2022 return was -18.1% and the 2023 YTD return is 24.5%. For World Equities, the 2022 return was -17.7% and the 2023 YTD return is 21.6%.

These asset class returns led to a 14.30% gain for a balanced portfolio in 2023, up from -12.43% in 2022 (Exhibit 7). This strong positive return placed it in the top quintile of balanced fund returns over the past 15 years (Exhibit 8) and was more than double the 6.94% average during that time frame.

The S&P 500 Index rose 24.23% in 2023, setting a new all-time high near year end. Stocks were supported by resilient economic growth, encouraging earnings and expectations that both inflation and interest rates had likely peaked. The total return of the S&P 500 Index (including dividends) was up 26.29% over the period.

2023 Bond Market Review

The Fed's preferred inflation measure, the Core PCE Index, fell to 3.2% YoY in November from 4.9% to start 2023. In a show of support, investors returned to the bond market in 2023 as fixed income fund/ETF flows were a positive $159B, reversing the record outflows of -$345B in 2022.

The S&P 500 is up about 24% in 2023, a stunning bounce back from last year—the index's worst performance since the 2008 financial crisis. The S&P 500 is set to log its best year since 2021's 27% return.

General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.

Many retirement planners suggest the typical 401(k) portfolio generates an average annual return of 5% to 8% based on market conditions. But your 401(k) return depends on different factors like your contributions, investment selection and fees.

Most major indexes were able to erase their losses from a dismal 2022. Smaller company stocks had a late rally, but managed to erase the bulk of their losses from last year. The Russell 2000 index finished 2023 with a 15.1% gain after falling 21.6% in 2022.

The S&P 500 generated an impressive 26.29% total return in 2023, rebounding from an 18.11% setback in 2022. Heading into 2024, investors are optimistic the same macroeconomic tailwinds that fueled the stock market's 2023 rally will propel the S&P 500 to new all-time highs in 2024.

Year-to-date, the index was up 6.84% (7.11%), as the 2023 return was up 24.23% (26.29%), making up for 2022's 19.44% decline; the one-year return was 28.36% (30.45%).

What happened in the monthly market review in March 2023? ›

Global equities gained in Q1, buoyed by receding recession worries in developed markets. Gains came despite the collapse of Silicon Valley Bank, which caused significant volatility in bank shares. Growth stocks outperformed value in the quarter. In fixed income, government bond yields fell (meaning prices rose).

As inflation finally seems to be coming under control, and growth is slowing as the global economy feels the full impact of higher interest rates, 2024 could be a compelling year for bonds.

Good Tidings. Let's review the good times of late 2023. The S&P 500, which tracks the most valuable stocks in the U.S. market, rose 11.2 percent in the last quarter — and had a total return of 11.7 percent, including dividends. For the year, it gained 24.2 percent and returned 26.3 percent, including dividends.

The estimates from strategists put the median target for the S&P 500 at 5,200 by the end of 2024, implying a decline of less than 1% from Friday's level, according to MarketWatch calculations. Heading into 2024, the median target was around 5,000 (see table below).

That being said, although each 401(k) plan is different, contributions accumulated within your plan, which are diversified among stock, bond, and cash investments, can provide an average annual return ranging from 3% to 8%, depending how you allocate your funds to each of those investment options.

Let's just say it: despite all the headlines, twists and surprises along the way, 2023 was a great year for investors. The S&P 500 was the star at +23% (all returns are total returns in CAD). Not to be left behind, Japan was up +19% and Europe +18%.

A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.