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Monthly Market Insights | February 2024

| February 08, 2024

U.S. Markets

Stocks saw modest gains last month as positive economic data and upbeat Q4 corporate reports helped support prices.

The Dow Jones Industrial Average advanced 1.22 percent, while the Standard & Poor's (S&P) 500 Index gained 1.59 percent. The Nasdaq Composite, which led throughout 2023, rose 1.02 percent.1

quotation mark icon

The best thing to hold onto in life is each other.

Audrey Hepburn, whom the American Film Institute considers one of the greatest legends of the Silver Screen.

Bumpy Start

It was not a straight line for stocks in January. As the month began, investors took a breath during the end-of-year rally to question the Federal Reserve’s next move on interest rates.

Where Is Goldilocks?

By mid-month, there was plenty of news to suggest a "Goldilocks" economy was taking shape indicating economic growth that was neither too "hot" nor too "cold."

Many of the headlines were upside surprises. Unexpected news on the jobs market was followed by December retail sales, which came in better than expected. The December inflation report was mixed, while the Q4 report on gross domestic product (GDP) topped economists’ expectations.2,3,4,5

Mixed Signals from the Fed

As expected, the Fed kept rates unchanged at its Federal Open Market Committee meeting, which concluded on January 31. In its summary report, some investors heard more neutral language that gave the Fed increased flexibility to cut rates in the coming months. Others, however, believe this would be the case only if the Fed believes the danger of inflation has decreased. The news took the wind out of stocks’ sails, modestly curtailing gains for the month.6

Sector Scorecard

Five of the 11 major sectors of the S&P 500 Index posted gains last month. Communications Services (+4.43 percent) was the clear leader, with Financials (+3.09 percent), Health Care (+2.93 percent), and Technology (+2.70 percent) performing well above the overall index’s return. Consumer Staples (+1.24 percent) also gained in January. Real Estate (-4.82 percent), Consumer Discretionary (-4.41 percent), Materials (-3.89 percent), Utilities (-2.97 percent), Industrials (-0.96 percent), and Energy (-0.51 percent) all declined over the month.7

U.S. Market Recap for January 2024MMI logo
S&P 500
green up arrow1.59
Month (%)
green up arrow1.59
Year-to-Date (%)
Nasdaq
green up arrow1.02
Month (%)
green up arrow1.02
Year-to-Date (%)
Russell 1000
green up arrow1.31
Month (%)
green up arrow1.31
Year-to-Date (%)
10-Year Treasury
green up arrow3.97
Month (%)
green up arrow0.10
Year-to-Date (%)
Yahoo Finance, January 31, 2024. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

What Investors May Be Talking About in February

At its December 2023 and January 2024 meetings, the Federal Reserve made it clear that it is now leaning away from rate hikes and toward rate cuts as it attempts to steer the economy to a soft landing this year. Therefore, in the month ahead, investors are expected to focus on two factors that may influence stock prices.

The first will be any signs of tailwinds in company fundamentals as the earnings season continues to unfold. The second will be any indication of a pickup in market volatility, which can happen as the economy transitions from a monetary tightening to a lower interest rate environment.

Fed officials are expected to make multiple appearances in February, which may indicate how members are seeing inflation and the outlook for rates. The next two-day Fed meeting will not be until mid-March.8

World Markets

The Morgan Stanley Capital International (MSCI) EAFE Index rose 0.54 percent in January—a modest rally that trailed the tech-driven gains in the U.S.9

European stocks were mixed. France picked up 1.51 percent, and Germany rose 0.91 percent. However, the United Kingdom fell 1.33 percent while Spain slipped 0.24 percent.10

A similar pattern was evident in the Pacific Rim markets. Japan’s Nikkei index (+8.43 percent) and Australia’s ASX 200 (+1.18 percent) notched gains, while China’s Hang Seng Index (-9.16 percent) and Korea’s KOSPI (-5.96 percent) lost ground.11

World Market Recap for January 2024
EMERGING MARKETSJANUARY (%)YEAR-TO-DATE (%)
Hang Seng (China)red down arrow-9.16red down arrow-9.16
KOSPI (Korea)red down arrow-5.96red down arrow-5.96
Nikkei (Japan)green up arrow8.43green up arrow8.43
Sensex (India)red down arrow-0.68red down arrow-0.68
EGX 30 (Egypt)green up arrow13.61green up arrow13.61
Bovespa (Brazil)red down arrow-4.79red down arrow-4.79
IPC All-Share (Mexico)red down arrow-0.02red down arrow-0.02
ASX 200 (Australia)green up arrow1.18green up arrow1.18
EUROPE  
DAX (Germany)green up arrow0.91green up arrow0.91
CAC 40 (France)green up arrow1.51green up arrow1.51
IBEX 35 (Spain)red down arrow-0.24red down arrow-0.24
FTSE 100 (United Kingdom)red down arrow-1.33red down arrow-1.33
IT40 (Italy)green up arrow1.29green up arrow1.29
Yahoo Finance, January 31, 2024. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Gross Domestic Product (GDP)

The U.S. economy grew by a 3.3 percent annualized rate in Q4, thanks to consumer and government spending. Economists expected 2.0 percent growth. GDP for all of 2023 grew at a better-than-expected 2.5 percent annualized rate, compared with 1.9 percent in 2022.12

Employment

Employers added 216,000 jobs in December, ahead of the 170,000 expected by economists. December’s increase was above November’s and October’s revised job gains of 173,000 and 105,000, respectively. The unemployment rate remained at 3.7 percent, while average hourly earnings rose by 0.4 percent.13

Retail Sales

Consumer spending rose 0.6 percent in December, exceeding expectations of a 0.4 percent bump.14

Industrial Production

Industrial output edged up 0.1 percent in December—the first increase in four months—compared with a 0.6 percent drop in November and a 0.4 percent revised decline in October.15

Housing

Housing starts fell 4.3 percent in December, which was likely due to rainy weather. Starts declined 9.0 percent for all of 2023.16

Existing home sales fell 1.0 percent in December, compared with November. December sales were down 6.2 percent from the same month in 2022—the lowest level since August 2010. Full-year sales for 2023 were the lowest since 1995. The year-over-year gain in the median sales price was 4.4 percent.17

Month-over-month new home sales increased 8.0 percent in December and were higher by 4.4 percent compared to a year ago.18

Consumer Price Index (CPI)

Consumer prices rose 0.3 percent in December over the previous month and 3.4 percent compared with a year prior. This was higher than the 3.2 percent increase economists expected. Core prices, which exclude food and energy, rose 3.9 percent year over year.19

Durable Goods Orders

Orders of manufactured goods (designed to last three years or longer) were virtually unchanged in December—up $0.1 billion following a 5.5 percent increase in November.20

The Fed

The Federal Open Market Committee left rates unchanged at its January 2024 meeting. The Fed used more neutral language in their policy document, giving them more flexibility to cut rates in the coming months.

However, the Fed qualified this by saying that cuts were not automatic and that it would consider them only if inflation dangers abated. Financial markets were somewhat unsettled by the Fed’s updated language.21

By the Numbers: Flowers Around the World

Aalsmeer, Netherlands22

World's largest flower market

30%23

Percentage of American consumers who purchased fresh flowers and plants the day of Valentine's Day

22%23

Percentage of Americans who bought fresh flowers or plants as gifts in advance of Valentine's Day

15024

Varieties of wild roses

30,00024

Varieties of cultivated roses

5,000 years24

Amount of time roses have been cultivated

Red roses22

Flower Americans are most likely to purchase for Valentine's Day

Orange roses22

Flower Americans are least likely to purchase for Valentine's Day

6%23

Percentage the floriculture market is expected to grow in 2024

32,16123

Approximate number of floral shops in the U.S. at the end of 2023


 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, or state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, timeframe, and risk tolerance.

The forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. The S&P 500 Composite Index is an unmanaged group of securities considered to be representative of the stock market in general. The Nasdaq Composite is an index of the common stocks and similar securities listed on the Nasdaq stock market and considered a broad indicator of the performance of stocks of technology and growth companies. The Russell 1000 Index is an index that measures the performance of the highest-ranking 1,000 stocks in the Russell 3000 Index, which is comprised of 3,000 of the largest U.S. stocks. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark for the performance in major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

The Hang Seng Index is a benchmark index for the blue-chip stocks traded on the Hong Kong Stock Exchange. The KOSPI is an index of all stocks traded on the Korean Stock Exchange. The Nikkei 225 is a stock market index for the Tokyo Stock Exchange. The SENSEX is a stock market index of 30 companies listed on the Bombay Stock Exchange. The Jakarta Composite Index is an index of all stocks that are traded on the Indonesia Stock Exchange. The Bovespa Index tracks 50 stocks traded on the Sao Paulo Stock, Mercantile, & Futures Exchange. The IPC Index measures the companies listed on the Mexican Stock Exchange. The MERVAL tracks the performance of large companies based in Argentina. The ASX 200 Index is an index of stocks listed on the Australian Securities Exchange. The DAX is a market index consisting of the 30 German companies trading on the Frankfurt Stock Exchange. The CAC 40 is a benchmark for the 40 most significant companies on the French Stock Market Exchange. The Dow Jones Russia Index measures the performance of leading Russian Global Depositary Receipts (GDRs) that trade on the London Stock Exchange. The FTSE 100 Index is an index of the 100 companies with the highest market capitalization listed on the London Stock Exchange.

Please consult your financial professional for additional information.

Copyright 2024 FMG Suite.

1. WSJ.com, January 31, 2024

2. MarketWatch.com, January 17, 2024

3. CNBC.com, January 18, 2024

4. WSJ.com, January 18, 2024

5. CNBC.com, January 25, 2024

6. WSJ.com, January 31, 2024

7. SectorSPDR.com, January 31, 2024

8. StLouisFed.org, 2024

9. MSCI.com, January 31, 2024

10. MSCI.com, January 31, 2024

11. MSCI.com, January 31, 2024

12. CNBC.com, January 25, 2024

13. CNBC.com, January 5, 2024

14. CNBC.com, January 17, 2024

15. Statista.com, January 26, 2024

16. Reuters.com, January 18, 2024

17. CNBC.com, January 19, 2024

18. NationalAssociationofHomeBuilders.org, January 25, 2024

19. WSJ.com, January 11, 2024

20. Census.gov, January 25, 2024

21. WSJ.com, January 31, 2024

22. Safnow.org, August 2023

23. Safnow.org, August 2023

24. 1800Flowers.com, February 2024