Stocks started the year off strong with the NASDAQ leading the way for US equities. After a largely sour 2022 for the growth-heavy index, it soared 10.7% higher in January, while the small-cap Russell 2000 also jumped 9.8%. The widely-tracked S&P 500 advanced 6.3%, though January was relatively underwhelming for blue chips, as the Dow Jones Industrial Average rose 2.9%. Nonetheless, equities were off to the races across the board (and world) in January.
Eight of the 11 S&P 500 sectors were higher in January. After an 11.4% decline in December, the Consumer Discretionary sector went from worst to first in January, logging a 15.1% gain. Communication Services was not far behind with a 14.8% increase. At the bottom of the list were the less economically-sensitive sectors of Consumer Staples, Health Care, and Utilities, as investors largely went risk-on.
Inflation slowed for the sixth straight month to 6.45% YoY, and core inflation fell a quarter of a percentage point as well. The gap between new and existing home sales widened—US New Single-Family Home Sales MoM grew for the third straight month, but Existing Home Sales contracted 1.5%, marking its 11th consecutive monthly fall. The median national existing home price also declined 1.5%. In the world of crypto, Bitcoin and Ethereum each soared well over 30% last month, marking quite a turnaround from last year when both cryptocurrencies plummeted around 65%.
Yields on longer-term treasuries fell while those with short-term maturities rose. The 5-Year, 10-Year, and 20-Year rates all declined by 36 basis points. On the flip side, yields on the 1-Month, 3-Month, and 6-Month Treasury Bills increased in January. The 1-Month saw the largest increase across the yield curve, at 46 basis points. Globally, Japan’s 10 Year Government Bond Interest Rate increased by six basis points.
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