U.S. and developed markets set new price records on economic and earnings growth, but fixed income lagged as interest rates rose during the quarter. Income, spending, and business investment stayed positive, but headline and core inflation remained above the Fed’s target levels.

Every year or two, a new round of worries crops up. Some of them are real—the war in Ukraine, inflation, politics—but a surprising number are not. The challenge, of course, is telling which is which. 

February was a good month for stocks, with most markets up in the low- to mid-single digits on positive economic and earnings news. The riskiest indices, the Nasdaq and emerging markets, performed especially well as investors stayed risk-on. Fixed income, on the other hand, generally declined as interest rates rose significantly during the month on fading hopes for Fed rate cuts. These results reflected the broader economy in different ways. But, where growth continues, so does inflation.

Stocks performed well in February, with most markets up in the low- to mid-single digits. The Nasdaq and emerging markets did especially well, but fixed income declined as interest rates rose. Job, income, and spending growth remained positive, but these results kept inflation up.

In general, markets edged up last month. U.S. markets continued their rally at a slower pace as interest rates bounced around, which also constrained fixed income returns. International markets were more mixed, with developed international markets roughly even and emerging markets down, primarily due to weak performance in China.

The U.S. stock market reported lower-single-digit gains in January, while international and emerging markets lagged behind. The economy performed well, as strong retail sales, a healthy jobs market, and consumer confidence drove the fourth-quarter growth.

Markets rose last month, continuing November’s rally as interest rates pulled back even more on expectations of Fed rate cuts in 2024. Markets in the U.S. were up by mid-single digits, finishing a solid quarter and a very strong year. International markets were also up substantially for the month, quarter, and year. And while stocks were hot, even fixed income posted enough gains to close out the year in the black. 2023 ended with a bang.

Markets around the world were up from 3 percent to 6 percent last month and up by double digits across the board for the year. The lack of a recession drove these positive results, with job growth and consumer confidence remaining healthy.

I’ve always loved Christmas, but I think I’ve lost much of the spirit as I’ve gotten older. Now that I have a young son—who enjoys baking cookies with his mom and eyeing presents under the tree, while struggling to behave under the eye of the “Elf on the Shelf"—I find myself recovering much of what I’ve lost. This is wonderful, but, as a father, I also find myself reaching deeper into the meaning of the holiday.

Is it time to start thinking differently about asset allocation, or does the 60/40 portfolio still make sense? That was the question for members of our Investment Management and Research team—and the topic made for some lively discussion.

Watch the video below to hear what the team thinks about this longstanding investment strategy. And if you're looking for a broader economic and market view, click on 2024 Outlook in the sidebar to your right.