A September to Not Remember

Monthly Market Snapshot: September 30, 2022

Highlights

U.S. stocks have declined for three consecutive quarters with the S&P 500 tumbling another 5.3% in the third quarter of 2022. The tech-heavy NASDAQ fared slightly better but still closed the quarter down 4.1% and is now down 32.4% year-to-date. European stocks and emerging market stocks were among the worst performers in the quarter as the U.S. dollar continued to surge. European shares were off 10.0% in the quarter while emerging markets stocks shed 12.5%. Global fixed income markets did not fare much better with U.S. Investment Grade debt sliding 4.8% in the quarter as yields soared on rising expectations for aggressive central bank tightening.

Investors remain squarely focused on central banks. Inflation remains extremely high across many developed markets, and central banks are responding with aggressive rate hikes. The unanswered question is whether a global recession will occur in 2023 or not. We believe the odds of a U.S. recession in 2023 are now about 70%. Investors will look for signs of a weak labor market with hopes that it could force a Fed pivot.

Citi Global Wealth Investments’ (GGWI) Global Investment Committee remains defensive with a slightly underweight global equity position and a modestly overweight global fixed income position.