January Hawks & Doves

February 13, 2024

January markets reacted positively to the end of 2023’s strong jobs report that helped keep unemployment at 3.7%. U.S. markets finished higher for the month of January over December. The Dow Jones Industrial Average continued its 2023 rally through January gaining 460.76 points, or +1.22% for the month. The NASDAQ gained +152.6 points or +1.02%, while the S&P 500 had the highest percentage returns for the month at 1.59% to reflect a +75.82 point increase.

The best performing S&P sector was communications – lead by Netflix and Verizon – returning 4.84% for the month followed by information tech and financials at +3.91% and +2.90%. The worst performing S&P sectors were real estate and materials indexes – down -4.79% and -3.93%, respectively. The best performing non-U.S. equity index was Japan’s Tokyo Stock Exchange Price Index (TOPIX) returning 7.8%, followed by European markets returning 2.1%. U.S. Bonds finished down with the Bloomberg U.S. Agg Index -15.93 points or -.74% for the month. U.S. benchmark treasuries were down -.3% with corporate high yields flat. Global bonds were down -1.8%. Growth stocks gained 2.21% in January with Value stocks flat.


The Federal Open Market Committee (FOMC) meeting on January 31, shed light on the Fed’s continued hawkish stance on U.S. price controls. The FED held rates steady at 5.5% for the fourth consecutive meeting. In the post-meeting press conference Powell stated, “We believe that our policy rate is likely at its peak for this tightening cycle, and that if the economy evolves broadly, as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”1 As for future rate cuts, Mr. Powell stated “In considering any adjustments to the target range for the federal funds rate, the committee will carefully assess the incoming data, the evolving outlook, and the balance of risks. The committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.”

Most economists and markets predict a .25% (25 basis points) rate cut to occur in May 2024 rather than the oft-predicted March 2024 cut. A ‘60 Minutes’ interview featuring Powell recorded on February 1st further solidified the May prediction. When asked about a March rate cut Powell responded, “I think it's not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks.”2 This interview occurred before the better-than-expected jobs report where the U.S. added 353,000nonfarm payroll jobs compared to a consensus estimate of 185,000. Real GDP growth was down to 3.3% compared to 2023’s 4th quarter figure of 4.9%but was still stronger than the consensus estimates of 2% made by leading economists.

Looking Ahead

An average of twenty-four analysts’ – each representing large brokerage firms and investment banks – predicted a 2024 closing value to the index of 4,867 points at the end of the year.3 While the index could certainly close at that level, that figure has already been eclipsed in the first month of 2024. The S&P is largely weighted toward its Technology sector, where companies such as Apple & Microsoft make up roughly 29.87% of the index’s total weight. With this vast weighting toward technology driven stocks, it’s no surprise that as the fortunes of the ‘Magnificent Seven’ (Amazon, Apple, Google, Meta, Microsoft, Nvidia, and Tesla) fluctuate so do many portfolios depending upon their weighting toward these companies. Given the expected rate cuts in the coming year, corporate earnings could be on the upswing, a positive for the market. However, there are many headwinds facing investors and markets in the coming year. How will markets continue to react to the growing unrest in Ukraine and the escalating tensions in the Middle East? Only time will tell.

Brandon Cooper
Portfolio Management Associate

Published January 31, 2024; Accessed February 7, 2024

2https://www.cbsnews.com/news/full-transcript-fed-chair-jerome-powell-60-minutes-interview-economy/  Transcript published February 4, 2024;Accessed February 7, 2024

Published January 24, 2024; Accessed February 7, 2024

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange.

The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.

The S&P500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.

The Tokyo Stock Exchange Price Index (TOPIX) is an unmanaged capitalization weighted measure (adjusted in US dollars) of all shares listed on the first section of the Tokyo Stock Exchange.

Bloomberg Capital U.S. Aggregate Total Return Bond Index is an unmanaged index of prices of U.S. dollar-denominated investment-grade fixed income securities with remaining maturities of one year and longer.

The Federal Open Market Committee is a committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.

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