Broker Check

Q3 Market Outlook 2023

July 21, 2023

As economic indicators fluctuate, it becomes crucial to understand the current state of the global economy and its potential impact on various sectors. In this blog post, we will explore the looming recession, the government's focus on inflation, the Federal Reserve's stance on interest rates, and the market trends surrounding international stocks, big tech, and the energy sector.


Recession Perception: Mild and Rolling:

While a recession may be on the horizon, there is a prevailing perception that it will likely be mild or even a “rolling” recession. A "rolling" recession is essentially a recession that "rolls" through different sectors at different times, instead of a full widespread recession which affects the entire economy all at once.  One key factor influencing this perception is the strength of the labor market and the consumer-driven nature of the economy. These factors collectively contribute to reducing the odds of a severe downturn.


Government's Focus on Inflation:

In light of the potential recession, the government's attention is primarily directed towards battling inflation. As inflation rates continue to be a concern, policymakers are closely monitoring the situation. In most cases, inflation is actually more feared by the government than a possible recession. So, the government's emphasis on curbing inflation may have implications leaning towards the odds of a recession, with efforts being prioritized accordingly to curb interest rates.


Federal Reserve's Stance on Interest Rates:

The Federal Reserve has temporarily paused interest rate hikes, indicating a cautious approach to monetary policy. Despite falling inflation rates, there remains a possibility of minor rate adjustments in the future. As mentioned above, in the efforts to curb inflation and rising interest rates, a recession is on the rise. The Fed's decisions on interest rates will be crucial in influencing economic stability and growth.


Inflation Trends and Impact:

Although inflation has slowed down, it remains above worrisome levels. However, certain markets, such as housing and the automotive industry, are beginning to find balance, which could contribute to reducing inflationary pressures. Keeping a close eye on these sectors will provide insights into potential improvements in the inflationary landscape.


Weakening US Dollar and International Stocks:

The US dollar has experienced a decline due to improved growth in overseas markets and cash flowing into non-US markets. This weakening trend can have implications for international investments and global trade. As a result, international stocks are displaying positive signs for the future, making them an attractive option for investors seeking potential growth opportunities.


Big Tech's Influence on the S&P 500:

Big tech companies have been leading the rise of the S&P 500 this year. Enthusiasm surrounding the tech sector, particularly in areas such as artificial intelligence (AI), has become a recurring theme. Investors are increasingly drawn to the growth potential and disruptive innovations offered by the tech industry.


Energy Sector Transition and Policy Impacts:

The energy sector has gained significant attention due to the United States' commitment to transitioning to cleaner alternatives. Policies focused on areas like renewable energy and electric vehicles are shaping the landscape, resulting in increased discussions and investment opportunities in the energy sector. Observing these policy changes will provide valuable insights into future market developments.


As the global economic landscape evolves, it is essential to stay informed about the potential challenges and opportunities that lie ahead. While a recession looms, its severity may be mitigated by a strong labor market and a consumer-driven economy. The government's focus on inflation and the Federal Reserve's stance on interest rates will play vital roles in shaping economic stability. Additionally, international stocks, big tech, and the energy sector present promising avenues for growth and investment. By remaining knowledgeable and adaptable, individuals and businesses can navigate the ever-changing economic environment more effectively.


The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The views stated in this piece are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities. Due to volatility within the markets, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.