February 2023 PDS Market Commentary


We were hoping for a strong start to the stock market this year and have yet to be disappointed! Through the first five weeks, the S&P has gained 8%, the Nasdaq is up 15%, and the Dow up 3%. Even the US Aggregate bond index is up near 1.5% this year. After a historically difficult year for diversified portfolios, it’s been a relief to see most asset classes working. In fact, 75% of the companies in the S&P 500 and the Nasdaq 100 are positive year to date.

But despite growth stocks outperforming, growth in the economy appear to be facing strong headwinds. The US leading economic indicators [LEI] are 10 data points that can help forecast the future health of the economy. At the close of 2022, the growth rate of these had moved to negative territory. The chart below goes back to 1970 and tracks the basket of leading economic indicators. The gray bars represent recessions. Since 1970, anytime these leading indicators have turned negative (the blue sections), a recession has eventually followed.

We are being cautiously optimistic the market trend that has begun the year will continue on, but there is no crystal ball to know what may crop up. Much of the performance has been a result of inflation continuing to tick down, paired with more confirmation from Jerome Powell and the Fed that interest rates are near their peak. “Disinflation has begun”, Powell said earlier this week. But with the probability of an economic recession growing, we expect volatility and risk to remain ever present in markets.


IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PDS Planning, Inc. [“PDS”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from PDS. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PDS is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the PDS’ current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.pdsplanning.com. Please Note: PDS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to PDS’ web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a PDS client, please contact PDS, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.