Monthly Market Recap

Monthly Market Recap

March 07, 2023

Monthly Market Recap

The year kicked off with a bang. February, not as much as many major stock indexes pulled back. January saw hefty rebounds in many areas in the market that struggled in 2022. Meme stocks and growth companies with hefty valuations fueled many of the headline returns. During the month of January, the Russell 1000 Growth TR USD Index grew at 8.33%. During the month of February, the same index was down -3.57%. Value (the leader last year) has been trailing growth and is up only 1.24% Year to Date. Much of the returns seen in growth have been a mix of several different factors. Some of the outperformance in growth is a reaction to tax loss harvesting which occurred in December of last year. At the end of the year, many investors with sizable losses in taxable accounts, sold their positions to harvest losses from the volatility of 2022. Many of those same investors (after waiting 31 days) purchased these positions back which helped to fuel a rally in these growth types of companies. Another headline from January, was significant short covering as many of these growth companies were some of the most heavily shorted sectors of the market. On January 26th, 2023, the Wall Street Journal mentioned that the heaviest shorted positions within the Russell 1000 were up an average of 16.4%.

On the bond front, yields have risen higher in February as the Fed is expected to keep rates “higher for longer” as the fight against inflation continues. On the week of February 9th, we saw the Bloomberg Aggregate bond index drop 1.92% as yields spiked higher on bonds. This was in response to the belief that the fed will need to push rates higher.

In our opinion, one of the most interesting developments of 2023, will be the impact of rising yields in the bond market. As of 2/27/2023, US 2-Year Treasuries are now paying 4.81%. For the first time in a long time, bonds now have the potential for real yield (A yield that is higher than the current rate of inflation) which may give stocks more competition as a place to invest money. This story will most likely play out over the year and will challenge the previous playbook of the past decade. We see dividends and return on shareholder equity as playing a bigger role in 2024 as companies look to compensate investors for their investments.

Feel free to contact us with questions about how we are positioning your portfolio this year.

*All Data is as of February 27th, 2023.

  • Banerji, Gunjan. “What's behind the Market Rally? Short Covering.” The Wall Street Journal, Dow Jones & Company, 26 Jan. 2023,
  • Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. Past performance cannot guarantee future results.
  • Please also note that the above does not constitute an investment recommendation. Please
    contact your investment professionals before making any investment decisions.