Despite suffering their worst month since the start of the pandemic, the major U.S. indexes nonetheless closed out January on an up note, as it appeared that investors were looking past ongoing tensions in Ukraine and the Federal Reserve’s plan to begin hiking its overnight lending rate in March, choosing instead to focus on the generally favorable outlook for Corporate America.
Altogether, the Dow Jones Industrials ended yesterday’s session up 406 points, or 1.2%. The broader S&P 500 moved ahead 83 points (+1.9%), while the tech-heavy NASDAQ topped the list, advancing 469 points (+3.4%). All of the major market sectors ended the session solidly in the green, led by consumer discretionary (up 3.8%), technology (+2.7%), and communication services (+2.4%). Energy shares were the laggards on the day, rising 0.4%. Looking back further, however, the picture is less rosy. For the month of January, the Dow Industrials slipped by 3.3%, the S&P 500 fell 5.2%, and the NASDAQ composite was down just under 9%.
Notably, some of January’s most beaten-down shares, such as Tesla (TSLA), Netflix (NFLX) and Spotify (SPOT), posted double-digit bounces as buyers were attracted by the lower valuations. Volatility will likely remain elevated in the months ahead, as investors get acclimated to the shift in monetary policy. The market is now pricing in at least four quarter-point interest-rate hikes by the Fed this year, as several policy makers recently emphasized the need for gradual moves.
Meanwhile, oil prices moved higher, with light sweet crude up 1.5%, to about $88.15 a barrel. The commodity had its strongest start to the year in decades, rising about 15% last month.
With trading about to begin on our shores, stocks in Asian markets closed mostly up overnight, and the European exchanges are firmly in positive territory. Meanwhile, U.S. stock futures are up, and oil is edging lower ahead of tomorrow’s meeting between Saudi Arabia and its oil producing partners.
With regards to news, the Institute for Supply Management announces its Purchasing Managers Index (PMI) for January this morning, and we’ll also be getting December’s numbers on job openings and construction spending. Thursday brings the latest figures for initial jobless claims, the service economy, and factory orders, among others. Friday’s economic slate includes updates on nonfarm payrolls and the unemployment rate.
Finally, earnings season keeps rolling along, with investors poring over the latest reports from such big names as Alphabet (GOOG) Facebook (FB), ExxonMobil (XOM), Amazon (AMZN), and Merck (MRK).
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
