Looking back on our thoughts from last year, we anticipated 2023 to be characterized as a year of taking two steps forward and one step back. In the final quarter of last year, we witnessed both a notable step forward in the equity markets, as well as a step backwards in fixed income yields.
The market's pullback in October created an opportunity. We strategically redeployed the cash reserves we had set aside, reinvesting into the equity markets, especially in areas sensitive to interest rate changes. Since November 1st, there has been a rally in both equities and fixed income, spurred by signals from the U.S. Federal Reserve of potential interest rate cuts in 2024 and robust economic data from the U.S.
While there's still a chance of a mild, short-lived recession in both the U.S. and Canada, our perspective is that any such downturn would be shallow. The expectation of a recession contributed significantly to the equity market's earlier volatility in the fall of 2022 and 2023. However, as investors, we remember that equity markets look ahead. The recent upward movement is anchored in the expectation of resumed corporate earnings growth later this year, alongside declining inflation and reducing interest rates.
We are cautiously optimistic in our views of equity markets in 2024, projecting a target return for Canada and the US aligned with historical earnings growth as we move further away from the effects of the fiscal and monetary responses to the pandemic. That said, we anticipate that there will likely be increased volatility as the debate continues between an economic soft or hard landing. In 2023, technology stocks linked to artificial intelligence were standout performers initially, but later in the year, we observed a market advance expanding into other sectors like financials, healthcare and industrials. This broadening of market growth is a positive indicator as we step into 2024.
Given the recent market performance, we plan to rebalance your portfolio to its target allocations. This involves taking profits in sectors like technology and shifting towards higher dividend-paying stocks, which had previously faced pressure from peaking interest rates.
Regarding the upcoming U.S. election, history tells us that the outcome is difficult to predict. From a portfolio standpoint, we've reviewed each company in your portfolio, ensuring your holdings remain targeted towards quality businesses, vital to their customers, led by strong management, and capable of navigating shifting economic landscapes.