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The market cap- and equal-weighted S&P 500 indices had a nice rally to end 2023. Much of this optimism was fueled by the expectation of multiple Federal Reserve interest rate cuts in 2024.

The market (S&P 500) peaked in January 2022, then fell 25.3% over the next 10 months. But then it retraced those losses to the tune of 28.2%. The 10-year Treasury may be the catalyst.

It appears that the market has started a correction over the last two months. Since last week, the market has fallen 4.2% - and 5.5% since the highs set at the end of July.

The markets may experience rising volatility in the intermediate term, and it doesn’t appear that the rally we have enjoyed for the first half of the year will continue unabated.

Not a whole lot has changed these last two weeks. During August, the market lost about 4.5% in value for the first 3 weeks of the month; though we’ve mostly recovered that in the last week.

We’ve had a bit more volatility these last few weeks. Since reaching that peak on August 1, the market has declined about 4.5% peak-to-close of market on August 17 – quite graduallly.

Since bottoming in October 2022, the market has climbed higher and higher, almost fully recovering the value lost during 2022, with short periods of volatility during downturns.

Not a lot has changed in the market over the last week, although we had a pretty nasty 80% down day yesterday. Volume was low however, despite the fact that a lot of stocks were down.

The indices have taken off so far in 2023. But returns are not what they seem beneath the surface.