2nd Quarter of 2023 Economic Update

Alexis DuffyMonthly Newsletter, Newsroom

A review of Quarter 2

Presented by The PensionmarkMeridien Team


Let’s make it three for the S&P! The second quarter of 2023 was the third consecutive positive quarter for the S&P 500 and the Dow Jones Industrial Average. The NASDAQ 100 was the biggest gainer of the three major indexes in the second quarter, with AI and large-cap tech fueling gains.

For the second quarter of 2023, the S&P 500 increased by 8.30%1, the NASDAQ 100 rose by a whopping 15.16%2, and the Dow Jones Industrial Average saw an uptick of 3.41%3.


Investors shook off the banking turmoil that was front and center in the first quarter. 

A Federal Reserve-induced recession 4 is still a distinct possibility, as interest rates remain elevated, and tightening credit is making its way through the markets. However, that did not come to pass in the second quarter, as major U.S. stock indexes traded positively. 


Inflation metrics continued to decline5 in the second quarter, with the last Consumer Price Index data showing monthly consumer pricing declining in May from April levels.

Year over year, inflation slowed to a 4.0% rise. In comparison, the year-over-year metric just a few months ago was 6.0%. That’s an impressive decline. 

Core CPI (which removes food and energy) remains firm, potentially backing the Fed’s case for additional rate hikes. U.S. equities loved seeing headline inflation metrics tick lower throughout the second quarter, however.


Strength persisted in labor markets throughout the second quarter, with solid payroll gains (253,0006  in April and 339,0007 in May), both numbers beating analyst consensus expectations.

In April, the unemployment rate tied for the lowest level since 1969, at 3.4% vs. 3.6% estimates. For May, the unemployment rate rose to 3.7%8, higher than the estimate of 3.5%. Perhaps this was a factor in the Fed not raising rates in June.

As inflation readings decline, it is natural to expect some slowing in the labor market, according to conventional wisdom. As of the second quarter, the labor markets remained steady overall. America’s labor shortage 9 is real. 


The second quarter featured a 25-basis-point hike10  in May and no hike at the June meeting, with the Fed taking a breather after ten consecutive rate hikes. 

The third quarter brings two Fed meetings: July 26th and September 30th. The Fed has indicated11 two more hikes for 2023, and many analysts seem to agree. The July meeting may bring one of those hikes.


Treasury yields rose overall in the second quarter after taking a breather towards the end of Q1 courtesy of banking system instability. 

The benchmark 10-year yield settled near 3.82%12 to end the second quarter, down from its 3.493% yield to close out the first quarter.

Shorter-term Treasury yields have risen more precipitously than their long-term counterparts lately, with the 2-year note yielding 4.90%13 and 1-month bills yielding close to 5.187%14 at the close of June.

The 2/10 yield curve has been inverted for an extended period (over a year), meaning the 2-year Treasury note yields more than the 10-year Treasury note. 

This inversion is a classic sign of a recession15 and often comes with a delayed fuse. Investors have ignored this phenomenon in recent weeks and months, as stocks continue their march higher overall.


AI and tech have continued to lead the markets16 in our evolving society.

As of June 28th, cruise operators were the stock market’s best performers in Q217. Pent-up travel demand persists! 


Entering the second half of the year, here is a recap of monthly themes in Q2:

  • Major U.S. stock indexes traded lower in April as markets braced for additional interest rate hikes; overall prices consolidated in then-recent monthly ranges.
  • May saw technology break out of recent reading ranges, with the NASDAQ surging.
  • Then there was June, when the rally started to broaden, featuring a breakout by the broad-based stock index, the S&P 500.


Active participants are currently debating whether the market is getting ahead of itself, given some of the macroeconomic headwinds. But these same folks more than likely missed this recent stock market rally. This is a big reason to be a long-term investor: timing the market is very difficult, and many get left behind.

Remaining focused on the long term allows an investor to avoid getting caught up in quickly changing narratives that could trigger emotional decisions.

With that said, if second-quarter market developments are on your mind, or if there is anything else we can help with, please email us or give us a call.

We are always here as a resource for you.

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The PensionmarkMeridien Team may be reached at 866-871-9963 or

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This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

1)      Trading View, June 30, 2023
2)      Trading View, June 30, 2023
3)      Trading View, June 30, 2023
4)      Fobes Advisor, August 15, 2023
5)      Forbes Advisor, July 12, 2023
6)      CNBC, May 8, 2023
7)      CNBC, June 2, 2023
8)      BLS.gov, August 4, 2022
9)      US Chamber of Commerce, August 10, 2023
10)   CNBC, March 22, 2023
11)   USA Today, June 14, 2023
12)   Trading View, July 2, 2023
13)   Trading View, July 2, 2023
14)   Trading View, July 2, 2023
15)   Investing.com, June 23, 2023
16)   Investor’s Business Daily, August 14, 2023
17)   Axios, June 29, 2023

Pensionmark® Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark® is affiliated through common ownership with Pensionmark Securities, LLC (member SIPC).