Stocks close higher in final trading day of January
Stocks added to a strong January rally in the final trading day of the month.
The Dow Jones Industrial Average rose 368.95 points, or 1.09%, to 34,086.04. The S&P 500 gained 1.46% to 4,076.60. The Nasdaq Composite added 1.67% to 11,584.55, in what was its best January since 2001.
— Sarah Min
Market is shifting to “Fed pause” rally too soon, says Lauren Goodwin
The stock market appears to be rallying in anticipation of pause in rate hikes from the Federal Reserve, even as the central bank is expected to hike its benchmark rate again on Wednesday, according to Lauren Goodwin, economist and portfolio strategist at New York Life Investments.
“This ‘Fed pause’ window we believe is likely to prove bullish, with a long duration and growthy tilt. In fact, we see that expectation as playing a large role in the 2023 rally already, and it’s a good reminder why being fully invested is an important component of building long-term wealth,” Goodwin said.
However, the January rally appears to be jumping the gun, Goodwin said, as there will likely be bad news on the economic front before the Fed pauses that could cause a reversal.
“Just remember: when the Fed pauses, it will likely be because the economy is convincingly turning over. That means the related rally is liable to be short-lived. We are fading this rally,” Goodwin said.
Instead of chasing this rally, investors should look at shifting from growth stocks to “more resilient sources of income,” she added.
— Jesse Pound
Stocks are range-bound as Fed meeting kicks off, BTIG says
Stocks are range-bound as investors await the policy outcome from the Federal Reserve’s latest meeting, which kicked off Tuesday, according to BTIG.
“Yesterday morning we said ‘we think there are pretty good odds we stay between ~4,000 and ~4,080 over the next 48 hours.’ While we might increase the upper end of the range to 4,100, we haven’t seen anything since then to materially change that view,” BTIG’s Jonathan Krinsky wrote in a Tuesday note.
Where stocks will go after the meeting will depend on whether the S&P 500 is at the top or lower end of that range, according to the note.
“In other words, if we are at ~4,080 on Wednesday at 2pm, any upside reaction is likely dampened, and downside potential increases. Conversely, if we are closer to 4,000, then the short-term downside reaction is likely less severe,” Krinsky wrote.
“In other words, counterintuitively, whatever your bias is you likely want the opposite move into Wednesday,” he added.
— Sarah Min
Today is historically the best day for stocks in January
January 31 is the best day for the S&P 500 in the month of January, according to data compiled by Carson Investment Research on the average performance per day since 1950.
The S&P 500 was up 0.97% Tuesday. In January, the S&P 500 gained 5.7%, which is the best monthly performance for the index since November.
The Wall Street saying, “so goes January, so goes the year,” has…
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