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Home / Blog / January 2024 Market Review
February 15, 2024
Fidelity Bank – Wealth Management,
January 2024,
William J. Fennie III, CFA
Global markets were a mixed bag to start the new year. After a rally in almost every asset class to end 2023, January saw US stocks rise 1.68%, while US Investment Grade Bonds fell 0.28%. Strength of the economy, inflation, disinflation, and the speed and timing of Federal Reserve shift in interest rate policy is driving markets on a day-to-day basis. Markets have been fixated on any clue as to when the Fed will lower interest rates. Unsurprisingly, the Fed left interest rates unchanged at its January meeting. Chairman Powell, in his press conference, also indicated that March is probably too soon for the Fed to start cutting rates. The January job report, released on 2/2/2024, indicated that 353,000 jobs were created in January, with upward revisions for December and November of 2023, highlighting a strong and resilient job market in the US economy.
Equity
The S&P 500’s march higher of 1.68% was led by High Quality Stocks (MSCI USA Quality: +3.13%) and Growth Stocks (Russell 1000 Growth: +2.49%).
Growth Stocks continued to lead Value Stocks in January, outperforming by 2.39% (2.49% vs. 0.10%). Small Cap stocks fell in January (-3.89%), mirroring the trend of Large Cap Stocks with Growth (-3.21%) outperforming Value Stocks (-4.54%).
From a sector perspective, Communication Services and Financials were the best-performing sectors with returns of 4.48% and 3.05% in December. Real Estate and Consumer Discretionary sectors were the laggards, falling 4.74% and 4.40% in January.
Developed Non-U.S. equities rose in January with MSCI EAFE gaining 2.61% in local currency and 0.58% in USD terms. While Emerging Markets lost ground in both local currency and USD terms, with the MSCI EM index falling by 3.49% and 4.64%, respectively.
Fixed Income
As the Federal Reserve has embarked on their hiking cycle, interest rate volatility has been the constant theme in the bond market for much of the past 2 years. Volatility as measured by the ICE BOA Move Index has largely remained above 100 since early 2022. Over the past year, the 10 Year Treasury Yield has risen from 3.30% to right around 5.00% to then fall to 3.80% and then ending January at 3.90%. As the Fed continues to evaluate its interest rate policy, it is likely bond market investors will have a bit of a bumpy ride; however, starting period yields are significantly higher than at the beginning of Fed’s hiking cycle. These higher yields should be a significant tailwind for bond investors as rates stabilize or fall in the future.
Real Assets
The Bloomberg Commodities Index was slightly positive by 0.40% in January as Oil prices (WTI) rose more than 7.70% as tensions in the Middle East put pressure on supplies. However, the industrial metals, the precious metals, and the agriculture complexes were all negative in January, falling 1.90%, 1.29%, and 1.03% respectively. After a significant rebound in November and December, REITs fell by almost 4.90% in January.
As global markets navigate various economic indicators and policy shifts, investors remain vigilant for cues amid changing landscapes.
Fidelity Bank Wealth Management101 N. Blakely St.Dunmore, PA 18512www.bankatfidelity.com1-800-388-4380
