New All-Time Highs for Major Indices

February 6, 2024

January is traditionally a good month for the market as it is the month with the largest inflow of money into retirement accounts.  Regardless of your income, if you participate in a 401k plan you contribute in January.  The Goldilocks economy we had near the end of last year continued into the new year with a growing economy while interest rates, inflation and oil prices moved lower.  Things are “just right” and that is a great environment for stocks.  We thought the new year might bring more attention to value stocks and diminish the interest in AI related activities, but January ultimately looked like a continuation of December.  The S&P 500, NASDAQ & Dow all powered to new all-time highs during the month while the more representative equal weighted indices were left behind.  At the end of the month the S&P 500 had gained 1.6% and the tech heavy NASDAQ was up 1%, but the equal weighted S&P 500 lost 1.1%.  A late month rally sent oil prices 5.7% higher and gold ended the month with a fractional loss.  

The month began with a holiday shortened week that featured selling from those who didn’t want to capture profits in 2023.  Apple is in all the major indices and that stock sold off to a 2-month low while the tech heavy NASDAQ had its worst day since October 5^th.  At the end of the week, we learned a better than expected 216,000 new jobs were created in December.  The so called magnificent 7, the stars of 2023, led the selling with a loss of 3.2% while the S&P 500 closed 1.5% lower.  The first full week of the year saw buyers picking up some of the perceived bargains that were created during the early year selling.  The government reported CPI ticked higher in December, but investors drove the S&P 500 to a new 52 week and closed the week with a gain of 1.8%.  The third week was another holiday shortened week because of the Martin Luther King Jr. holiday.  Rising interest rates sent the market lower early in the week, but early corporate earnings reports were stronger than expected pushing the S&P 500 to a new all-time high.  Interest rates continued to edge higher, but the S&P 500 added another 1.2%. The last full week of the month saw all major indices move to new all-time highs with the S&P 500 putting in a 6 consecutive day winning streak.  The widely followed index crossed 4900 for the first time in history and closed 1.1% higher.  The last few days of the month were uneventful until comments from Fed Chief Powell on the last day of the month sent the S&P 500 down 1.6% erasing half of the entire month’s gain. 

February is one of only 2 months that have, over the last 50 years, been lower on average.  Seasonality likely plays a role as some take profits from an often-strong January.  The period from November 1 through January 31 has traditionally been the strongest 3 months of the year for the market, but this year took that period to another level with a gain for the S&P 500 of over 15%.  Interest rates have been running the show over the past few years and we expect that to continue.  As long as we continue to have economic growth and interest rates don’t start moving higher, the current rally can continue, albeit at a more moderate pace.  Technology stocks tend to lead the market, both higher and lower, and all the excitement about the possibilities of artificial intelligence should keep investors interested in that space.  Stock valuations are well above historic norms so some profit taking would not be unexpected, but unless we have some headline making event, we would expect any weakness to be contained. 

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.