The US stock market rallied in July, helped along by better-than-expected economic data and inflation continuing to trend lower. Stocks declined at the start of August due to several factors including a downgrade of the credit rating for US bonds by rating agency Fitch, the US Treasury issuing more government debt than expected, and a conservative outlook from Apple.

During the second half of August, stocks recovered some of their losses as investors responded favorably to better-than-expected results from chip manufacturer Nvidia. However, the market’s late gains were not enough to offset earlier losses and the S&P 500 index posted a decline for the month of August overall. This was the first monthly loss for the S&P 500 since February.

Stocks drifted lower during the first half of September. Selling intensified following the end of the Federal Open Market Committee (FOMC) meeting on September 20.  The consensus forecast from FOMC members is that the Fed Funds rate likely will stay near its current level through 2024, longer than some investors had expected. This put technology stocks and other stocks with high valuations under pressure as investors adjusted their interest rate expectations.

Although the markets continue to be volatile, we remain optimistic about the stock and bond markets’ long-term prospects. First and foremost, the US economy is strong and likely to remain so. Second, investment valuations outside of the technology sector are attractive. For further details on each of these points, please see below.


The Economy:

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US unemployment rate remains low and the economy continues to add new jobs each month – suggesting the labor market remains strong.

Consumer spending remains resilient in the face of elevated prices.

The rate of price inflation continues to decline – suggesting that the Fed is likely to stop raising rates by year end.

Corporate earnings are expected to grow during the second half of 2023.


Investment Valuations:

With the rate of price inflation declining and the Fed poised to stop raising borrowing costs, it is likely that bond yields are near their peak and bond prices are near their bottom for this cycle.



If you have any additional questions, comments or concerns regarding the markets or current economic events please feel free to reach out to Paul in the main office to set a meeting with Dr. Peter Jankovskis, aka “Doc.” You can email or call us at 630.701.9080 any time Monday through Friday 8am-4pm.


This report has been generated from information that Arbor Financial believes to be reliable and accurate. We do not represent or warrant the accuracy or completeness of the information contained in this report. As such, all calculations, estimates, and opinions included in this report constitute our best judgment as of this date and may be subject to change.

Written by

Peter has more than 25 years of experience in the financial industry as a researcher, strategist, and portfolio manager.  As a portfolio manager at Arbor, Peter performs quantitative analysis on current and prospective portfolios.

Peter is a CFA charter holder.  He earned his PhD in Economics as well as dual Bachelors of Science degrees in Computer Science and Pure Mathematics from the University of California, Santa Barbara.

Before joining Arbor, Peter was a Founding Member of institutional money manager OakBrook Investments and worked there for 22 years serving in a variety of roles including portfolio manager, Director of Research, and co-Chief Investment Officer.  Prior to forming OakBrook, Peter worked at ANB Investment Management & Trust Company as a strategist, portfolio manager, and Head of Research.

Peter has lived in Lisle, Illinois since 1997.  Outside of work he enjoys sports car racing and is an active member of the Autobahn Country Club in Joliet, Illinois and the Sports Car Club America (SCCA).