December market recap

December market recap: Rates & rallies


2023 wrapped up with an “everything rally,” as all major asset classes posted solid gains in December.

For this year, the consensus has shifted from rates higher for longer to rate cuts, with inflation continuing to slow toward the Fed’s long-term target. Global stocks are once again trading back near all-time highs with losses from the 2022 bear market now erased. Notably, the Russell 2000 Small Cap Index jumped 12% in December, marking its biggest monthly outperformance relative to the S&P 500 since 2000.

In the most recent December Fed meeting, rates were left unchanged, as expected. The “dot plot,” a visual representation of FOMC member expectations, indicates three rate cuts for 2024. Based on current bond prices, the market is expecting even more. The 10-year treasury yield dropped back below 4% after nearly hitting 5% in October. U.S. bonds, measured by the U.S. Aggregate Bond Index, subsequently rallied 3.8% in December, and finished the year up 5.5%. This outpaced popular cash-like investments vehicles that have been attracting investor dollars, offering yields around 5%.

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Craig Birk, CFP®


Craig Birk is the Chief Investment Officer for Empower Personal Wealth. A CERTIFIED FINANCIAL PLANNER™ professional, he is responsible for Empower’s retail investment portfolio, providing strategic and executive direction to drive the optimal management of client assets.

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