Fourth Quarter 2023 Investment Research Update

This document is an investment research update for the fourth quarter of 2023, authored by Denise Chisholm, Director of Quantitative Market Strategy. It provides a performance summary of the S&P 500 index, noting that the technology-heavy index experienced a decline in year-to-date gains during the third quarter, influenced by concerns regarding prolonged high interest rates from the U.S. Federal Reserve. The report details sector performance, indicating that nine out of eleven sectors posted negative returns, with utilities and real estate performing the worst. The document includes a scorecard assessing sector fundamentals, valuations, and relative strength, highlighting energy and industrials as leading sectors in earnings growth. It also discusses the rotation towards cyclical stocks, noting significant shifts in investor behavior. The analysis emphasizes that past performance does not guarantee future results and includes various metrics such as price-to-earnings ratios and return on equity for sector comparisons.