After a roaring year-end rally, markets took a breather to kick off the new year.
Economic data remained strong with GDP growth exceeding expectations and the labor market remaining resilient. However, US stocks were split for the month as investors weighed the probability of when the Fed might begin rate cuts.
Large-cap US indices continued to climb higher, with the Nasdaq 100, S&P 500, and Dow Jones Industrial Average gaining 1.85%, 1.66%, and 1.22% respectively. Smaller companies didn’t fare quite as well with the Russell 2000 falling a modest 3.62%. As a whole, growth stocks outpaced value stocks in January, continuing last years trend.
International markets underperformed their US counterparts as developed international stocks dipped 1.09% and emerging markets fell 3.55%. Disappointing data from China, including weak retail sales and lackluster GDP growth, remained a headwind. Late in the month, a Hong Kong court also ordered the liquidation of property giant Evergrande, dealing another blow to confidence in the country’s deteriorating housing market.
The Fed left rates unchanged in its first meeting of the year. While rate cuts are expected to be on the horizon in 2024, Fed Chairman Jerome Powell said the committee isn’t ready to reduce the target range until it has more confidence that inflation is fully under control. With the probability of a March rate cut dwindling, the 10-year treasury yield rose from 3.88% to 3.99%, resulting in a slight loss of 0.27% for aggregate US bonds. Despite the setback, bonds remain in a more favorable position on a forward looking basis compared to a couple years ago, as higher interest rates result in higher income payments.
It’s not unusual for markets to press pause following a strong rally. Every year there are sure to be some bumps and uncertainties along the way. As headlines are likely to swirl around the Fed and the upcoming election later this year, its important to remain focused on the bigger picture. Having a plan and investment strategy in place can help cut through the noise, keeping the spotlight on achieving your long-term goals.
Come sail away…
Icon of the Seas, the worlds new largest cruise ship, set sail on its maiden voyage in late-January. The behemoth is 1,200 feet long and has 20 decks, 40 restaurants, seven pools, and eight neighborhoods.
Cruises have been experiencing an impressive comeback, recovering from their negative Covid-era image. End-of-year 2023 bookings were 20% higher than 2019, showing growing demand.
The industry’s been benefiting from repeat customers as well as younger adults. 85% of cruise passengers said they would go again, and more than two-thirds of 18 to 24 year-olds showed interest in taking a cruise.
With a younger demographic entering the picture, companies are starting to offer more options to appeal to this group. Bookings are expected to hit a record 35.7M this year as refreshed features continue to drive demand.
New year, new habits.
A poll found 21% of drinking-age US adults participated in Dry January, a month of avoiding alcohol consumption. This was a 6% increase from last year.
The trend represents a potential shift in consumer habits, as more than half of surveyed 18 to 26 year-olds said they haven’t had a drink in the past six months. US beer shipments also hit a 24-year low in 2023.
Nonalcoholic spirits are still only a drop in the bottle (with just $1B in annual sales compared to $650B for the broad spirits market), but market share is expected to grow 5x faster than the traditional alcohol space.
In attempt to make the most of the shifting landscape, major brands have been embracing no- and low-alcohol alternatives. Companies are hoping the higher costs of these options can help offset weaker sales volume.
Broad Market Returns
| Asset Class | 1 Month | 3 Month | YTD | 1 Year |
| S&P 500 (VOO) | 1.61% | 16.00% | 1.61% | 20.76% |
| NASDAQ (QQQ) | 1.82% | 19.14% | 1.82% | 42.51% |
| Large Cap Growth (VUG) | 2.16% | 18.95% | 2.16% | 35.89% |
| Large Cap Value (VTV) | 0.87% | 13.00% | 0.87% | 7.28% |
| Small Cap Growth (VBK) | -2.90% | 18.24% | -2.90% | 5.60% |
| Small Cap Value (VBR) | -2.49% | 16.38% | -2.49% | 3.70% |
| Developed International (VEA) | -1.09% | 13.64% | -1.09% | 6.99% |
| Emerging Markets (VWO) | -3.55% | 7.08% | 6.73% | -2.74% |
| REITs (VNQ) | -5.06% | 18.23% | 16.46% | -3.81% |
| Aggregate Bonds (BND) | -0.16% | 6.61% | 8.08% | 2.10% |
| Corporate Bonds (VCIT) | -0.05% | 8.47% | 10.26% | 4.50% |
| High Yield Bonds (JNK) | 0.15% | 7.17% | 8.50% | 8.22% |
| Long Term Treasuries (VGLT) | -1.79% | 12.27% | 15.97% | -5.33% |
| International Bonds (BNDX) | -0.58% | 6.60% | 6.14% | 5.65% |
Market Health Indicator
The Market Health Indicator (MHI) measures market health on a scale of 0 – 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.
Fun Facts
- A record 58% of US households are invested in the stock market, up from 53% in 2019.
- There are more active neurons firing in our brain when we’re dreaming than when we’re awake.
- The largest pizza in the world measured in at 13,957.77 square feet. Ingredients included 8,800 pounds of cheese and roughly 630,496 slices of pepperoni.
- Taylor Swift has officially passed Elvis as the solo artist with most weeks at #1 on Billboard’s album chart.
– The Aspire Wealth Team
Weekly Wake-Up
