U.S. Stocks, Bonds, Gold All Rise in Q1 Amid Volatility

Changing interest rate expectations, banking concerns whipsaw financial markets

Trader in front of screen viewing stock charts.

Michael M. Santiago / Getty Images

U.S. financial assets exhibited broad gains in 2023's first quarter, but not without considerable volatility along the way.

Key Takeaways

  • Despite a banking crisis and plenty of uncertainty around interest rates, stocks and bonds finished up in the first quarter of the year.
  • Gold also rose to approach a record high.
  • Cryptocurrencies extended their recovery from 2022's rout, with Bitcoin and Ethereum both gaining more than 50%.

Stock and bond markets rallied in January amid optimism that global central banks, led by the Federal Reserve, might soon halt interest rates hike—perhaps even setting the stage for rate cuts by the end of the year.

But stronger-than-anticipated February economic data dashed those hopes. Then, in March, two large U.S. banks failed and Swiss regulators forced the takeover of banking giant Credit Suisse, closing the book on its 166-year history. That triggered fears of global banking contagion that caused investors to flee stocks for safer assets, including bonds.

By the end of the month, those fears eased, with investors again raising their expectations the Fed would cut rates by the end of the year—especially after the Fed last week hinted it may at least pause its interest rate campaign.

Here's a closer look at how various assets performed in the first quarter:


At the top of the quarter, the S&P 500 enjoyed its best January since 2019 and the tech-heavy Nasdaq Composite posted its best start to the year since 2001.

Despite turbulence later in the quarter, the S&P 500, building on a late 2022 rally, gained 7%. The Nasdaq Composite rose 16.8%. The Dow Jones Industrial Average eked out a gain, increasing 0.4%.

Within the S&P 500 Index, tech stocks topped the list of highest individual gains, with NVIDIA (NVDA) rising 87%, Meta (META) gaining 73%, and Tesla (TSLA) up 59%.

Not surprisingly, individual bank stocks suffered the most. First Republic Bank (FRC) lost 89% of its value and Zions Bancorp. (ZION) dropped 38%. Charles Schwab (SCHW) fell 37% as investors worried it faced unrealized losses as many banks while investors moved to money-market funds.


U.S. bond markets suffered their worst returns in history last year. But they recovered slightly in the first quarter as yields, which move inversely from bond prices, dropped.

The 10-year U.S. Treasury yield opened the year at 3.88% and ended the quarter at 3.54%. In between, it fell as low as 3.30% and rose as high as 4.05%. For the quarter, the Bloomberg U.S. Aggregate Bond Index gained 2.5%.


As investors sought less risky assets late in the quarter, prices for gold—viewed as the ultimate safe haven asset—surged.

For the quarter, spot gold increased 8.5% to $1,977.96 per troy ounce, its highest level since March 2022 and near an all-time high.

Crude Oil

Oil prices fluctuated during the quarter, falling sharply as concerns about the banking system arose but rebounded along with stock prices just prior to the quarter's end.

West Texas Intermediate (WTI) crude contracts for May delivery fell 3.6% to $75.56 per barrel in the three-month period.

Real Estate

Rising mortgage rates have applied pressure on the U.S. housing market, in which available supply for buyers remains limited. Meanwhile, the commercial real estate market faces a glut of office space to which workers have not fully returned since the pandemic.

Still, the FTSE Nareit U.S. Composite Real Estate Index posted only mild losses in the quarter, falling 1.7%. The average fixed 30-year mortgage rate fell slightly to 6.32%, down 10 basis points.


Bitcoin soared 71% during the quarter to $28,419.36 from $16,576.25, and Ethereum increased 52% to $1,825 from $1,198.15.

Article Sources
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  2. Bloomberg. "Fed Rate Cuts in 2023 Priced Back In as Bank Worries Escalate."

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  4. Bloomberg. "Schwab Hit by Worst Month Since 1987 Amid Cash Sorting Woes."

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  6. CNBC. "Gold prices could notch an all-time high soon -- and stay there."

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  8. Bloomberg. "Tech's Retrenchment Hammers Landlords With Glut of Empty Offices."

  9. FRED Federal Reserve Bank of St. Louis. "30-Year Fixed Rate Mortgage Average in the United States."

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