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At-A-Glance | |
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January 2025 | |
Financial markets ended a rocky month broadly higher, with most asset classes including stocks, precious metals, and bonds posting gains. Technology was the only S&P 500 sector to end negative amid China’s development of a potentially lower cost AI model, DeepSeek. Bullish sentiment was also capped by no reduction in interest rates and an overhang of imminent trade tariffs. During the final trading day of the month, the Trump administration announced it would impose tariffs on imports arriving from Mexico, Canada and China. In key economic data, the U.S. economy expanded at a solid pace, with fourth quarter 2024 GDP growth of 2.3%. The headline personal consumption expenditures (PCE) price index increased 2.6% from a year ago in December, slightly surpassing forecasts for a 2.4% increase. However, the Fed’s preferred measure of inflation, the core PCE price index, which excludes volatile food and energy items, climbed to 2.8% on an annualized basis, matching forecasts. On a monthly basis, headline PCE prices rose 0.3% while core prices increased 0.2%, both in line with forecasts. The fourth quarter earnings season is nearly 40% complete with S&P 500 company earnings surpassing analysts’ estimates by 6.8% in aggregate with 77% topping projections. Overall, fourth quarter expectations signal revenue growth of 4.6% and earnings per share (EPS) growth of 10%. This compares to EPS growth of 8.7% expected as of December 31, 2024. Seven of 11 sectors are projected to record fourth quarter increases, with double-digit growth expected for communication services, consumer discretionary, financials, health care, information technology, and real estate, while declines are anticipated for consumer staples, energy, industrials, and materials. All sizes and styles posted respectable January gains led by Mid cap Growth and Large cap Value. In contrast, Large cap Growth gained the least, followed by Small cap Value. | |
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Top & Bottom Performers | |
Sector gains were led by Communication Services (+9.12%), followed by gains of over 6% in Healthcare and Financials. Consumer Staples and Real Estate gained the least. | |
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Foreign equities in developed markets widely outperformed relative to the U.S. last month with the MSCI EAFE Index advancing 5.26%. In MSCI EAFE country-specific indices, Germany led gainers, jumping 9.35%, followed by Switzerland (+8.15%) and France (+8.05%). Emerging markets recorded a smaller January gain of 1.79%, with Brazil’s 12.42% rally largely offset by losses in Malaysia (-4.71%) and India (-3.56%) together with China’s small 0.92% gain. Despite intra-month swings, the yield on benchmark 10-year Treasury notes was little changed, ending January at 4.548%, down 0.02% for the month. The Bloomberg U.S. Government Index rose 0.52% in January while the longer-duration Bloomberg index of U.S. Government long-term bonds rose a lesser 0.42%. On a broader basis, investment-grade bonds of all types, as measured by the Bloomberg U.S. Aggregate Bond Index rose 0.53% last month. Bloomberg’s U.S. High Yield Bond Index, representing holdings of below investment-grade (junk-rated) corporate bonds, performed best with a 1.37% monthly gain. Municipal bonds trailed, gaining 0.50% in January. | |
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This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on X. |
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Glossary
The Bloomberg Barclays Capital U.S. Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included.
The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity, but in practice the index holding have a fluctuating average life of around 12.8 years.
The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.
The Barclays U.S. Government Bond Index is comprised of the U.S. Treasury and U.S. Agency Indices. The index includes U.S. dollar-denominated, fixed-rate, nominal US Treasuries and US agency debentures (securities issued by US government owned or government sponsored entities, and debt explicitly guaranteed by the US government).
The Bloomberg Commodity Index is a broadly diversified index that allows investors to track commodity futures through a single, simple measure. It is composed of futures contracts on physical commodities and is designed to minimize concentration in any one commodity or sector. It currently includes 19 commodity futures in five groups. No one commodity can comprise less than 2% or more than 15% of the index, and no group can represent more than 33% of the index (as of the annual reweightings of the components).
The Cboe Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices.
The MSCI EAFE is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.
The MSCI Emerging Markets is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.
The MSCI All-Country World Index (ACWI) is a market cap weighted index designed to represent performance of the full opportunity set of large- and mid-cap stocks across 23 developed and 26 emerging markets, covering more than 2,700 companies across 11 sectors and approximately 85% of the free float-adjusted market capitalization in each market.
The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap represents approximately 31% of the total market capitalization of the Russell 1000 companies.
The S&P BSE SENSEX Index is a free-float market-weighted index of 30 well-established and financially sound stocks on the Bombay Stock Exchange, representative of various industrial sectors of the Indian economy.
The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.
The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad-based capitalization-weighted index.
The Shanghai Composite Index is a stock market index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.
The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000. It has since reached a February 1985 high of 164.720, and has been as low as 70.698 in March 2008.
West Texas Intermediate (WTI) is a crude oil stream produced in Texas and southern Oklahoma which serves as a reference or "marker" for pricing a number of other crude streams. WTI is the underlying commodity of the New York Mercantile Exchange's oil futures contracts.