January market recap
January market recap: Reactions & results
January market recap: Reactions & results
02.07.2024
Heading into the New Year, there was a significant disconnect between what the Federal Reserve said it expected for interest rate cuts and what was priced in markets. To close that gap in January, multiple Federal Open Market Committee members made it a point to vocalize their lack of urgency in cutting rates.
Investors finally started to believe them.
A strong report on gross domestic product late in the month dashed almost any remaining hope for a rate cut in March.
Market reaction
The outlook for a more patient Fed boosted the dollar and took most of the wind out of the global stock rally that began in November. The mega-cap heavy U.S. market managed modest gains as the Magnificent Seven continued to attract buyers, with the notable exception of Tesla, which was down almost 25% for the month.1
Outside of the biggest U.S. stocks, there was little breadth. The average issue in the S&P 500 was down, as were small cap stocks, which have proven to be more interest rate sensitive. International stocks also finished the month in the red.
Last year featured extreme concentration, where most market gains came from a very small number of companies. While we believe this trend is unsustainable and likely already overextended, it accelerated in January.
Mixed results
With all the hype around AI, earnings reports have been mixed. With about half of the S&P 500 reporting so far, earnings growth is tracking at a modest 1.6%, according to FactSet.2
Get financially happy.
Put your money to work for life and play.
1 YCharts
2 FactSet, "Earnings Insight," February 2024.
RO3377875-0224
Want to stay in the know?
Craig Birk, CFP®
Contributor
Craig Birk is the Chief Investment Officer for Empower Personal Wealth. A CERTIFIED FINANCIAL PLANNER™ professional, he is responsible for Empower’s retail investment portfolio, providing strategic and executive direction to drive the optimal management of client assets.
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites.
Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.
Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.