After a strong first half of the year, global equities faced several headwinds in the third quarter. Oil prices surged nearly 40% between mid-June and late September; Treasury yields have pushed to new cycle highs as the Federal Reserve has maintained a restrictive policy stance, which in turn has boosted the U.S. dollar. The S & P 500 Index reached a 2023 high at the end of July, but from its intra quarter high the index declined..
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The U.S. economy has been remarkably resilient in the face of tightening Fed policy. This was supposed to be the year of a likely recession. That has yet to happen; in fact, global equities continued to rally in the second quarter of the year, led again by surging U.S. mega-cap growth stocks. The S&P 500 index gained 6.6% in June and 8.7% in the second quarter driving its year-to-date return to 16.9%. Developed international..
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Economic stresses began to appear during the first quarter, capped by the second-largest bank failure in U.S. history (Silicon Valley Bank), as rising rates, tighter lending conditions and shrinking liquidity weighed on economic growth. Despite the turmoil, global equity markets held up remarkably well in March and posted solid returns for the quarter.
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