With Interest Rate Cuts on the Horizon, How Should Investors Position Portfolios in 2024?

Major Indices Post Gains in 2023, with Many Erasing 2022 Losses.

Amid a resilient economy, declining inflation, and increasing probabilities of a soft landing, equities were up in 2023. Though narrow market leadership via big technology stocks ensued for most of the year, market participation broadened in the final two months of 2023 as rates declined and the Fed discussed rate cuts ahead. The technology-heavy Nasdaq Composite was up 44.6%, the S&P 500 gained 26.3%, and the Dow Jones Industrial Average increased 16.2%. US growth (+30.0%) had a strong year while broad-based emerging markets were only up 10.5%. Within bonds, high yield credits were one of the best performers (+12.4%) while Treasury Inflation Protected Notes lagged (+3.0%). Aside from gold (+12.7%), commodities were down as broad-based commodities fell 8.8%, crude oil declined 4.9%, and silver decreased 1.1%.