October 5, 2023

The S&P 500 declined 4.8% in September, suffering its worst monthly performance of the year as bond yields broached new highs.   The move in rates was driven by several factors; including the realization of a higher for longer Federal Reserve given the resiliency of the economy and the removal of 50 bps of easing in the 2024 dot plot, a rise in energy prices, less disinflation momentum, and Treasury supply pressures and deficit concerns. Consumer headwinds also weighed on sentiment as excess savings near depletion and student loan payments resume. Real Estate (-7.3%) and Information Technology (-6.9%) were the worst performing sectors with Energy (+2.6%) the only sector to register a gain in September.  Small-cap stocks slightly lagged large-cap and mid-cap stocks from a market-cap perspective in September; however, there was not a lot of dispersion in performance between growth and value from a style perspective.