January saw strong performance in both stocks and bonds across the board. The S&P 500 posted its best January since 2019, while the NASDAQ recorded its best January in 22 years. The NASDAQ index gained nearly 11%, while S&P 500 gained more than 6% in total return. Overseas, the MSCI ACWI ex US index (international index) rallied an impressive 8.5%. In bonds, the Bloomberg aggregate bond index added nearly 3% in total return as lower interest rates and improving credit spreads helped boost bond prices.
For the week, stocks were basically flat ahead of the widely anticipated Federal Reserve announcement on Wednesday afternoon. Markets are expecting a 0.25% (25 basis point) rate hike, which would put the target range for the fed funds rate at 4.50% to 4.75%. The real focus for the markets will be on the guidance provided by Fed Chair Jerome Powell in the news conference following the announcement. Specifically, investors will be looking for insights into the status of the central bank’s fight against inflation, along with any comments on the state of the economy amid slowing consumer spending.
Alongside the Federal Reserve announcement, investors will have plenty to digest on the earnings front. This week marks the busiest week of earnings season, with 109 of the S&P 500 companies scheduled to report. Later in the week, market heavyweights such as Meta (Facebook), Apple, and Amazon all are scheduled to report fourth-quarter results. According to FactSet, 69% of companies already have exceeded earnings estimates, slightly below the 10-year average of 73%.
Source: GSAM, CNBC, JPMorgan
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Indices are unmanaged, represent past performance, do not incur fees or expenses, and cannot be invested into directly. Past performance is no guarantee of future results.