UK Markets closed

Stocks: The biggest S&P 500 gainers in January

Yahoo Finance Live’s Brad Smith breaks down January’s biggest S&P 500 gainers.

Video transcript

- And if we take a look at futures here this morning, a little bit lower as investors await today's big decision by the Fed. Here are three things you need to know this morning. A bullish or bearish message for the markets, Federal Reserve Chair Jerome Powell will speak at 2:00 PM today after the FOMC makes its decision, expected to make its smallest rate hike in nearly a year of 25 basis points.

- And Snap's market value is vanishing. Following another brutal earnings report, the company's weak outlook casting fresh doubts on the social media plays future.

- And Advanced Micro Devices or AMD topped earnings expectations for the fourth quarter despite slowing demand for PCs. We're going to dive into those earnings in just a minute. But first, let's take a look back at what some investors are calling big Jan out there in the markets as we start a new trading month here in February.

You've got one friend of the show Carson Group Chief Market Strategist Ryan Detrick calling this the bullish slingshot and saying it is here. And here's why because after a big January, like the one that we did see in the markets, the average full year gain is 29% for the S&P 500. And that's coming after-- that's when we have that big January, after a down year, which is exactly what we see. Now, in terms of some of the sector performers over the course of January, you had the out-sized move to the upside in consumer discretionary. Also communications services that moved higher by about 15% as well.

And in addition, some of the other largest decliners in 2022 where the biggest or out-sized move to the upside in the beginning of 2023. Technology and real estate, both of those up more than 9%. Let's also take a look at some of those individual movers. And for some of the mega-cap tech stocks, that's where you actually saw the biggest rebound here. Take a look at Tesla. That moved higher in January by about 40% there. NVIDIA also moved up by about 33%, 34%. Amazon, also a big move there. So that just kind of continues the theme for some of the bigger decliners, the largest decliners, that we saw getting a little bit of a rebound coming into the start of this year. But again, it's all still relative here as well.

- Yeah, exactly. And really, the question is, will the Federal Reserve come in here and want to smack down the advances that we have seen in the market? That's the big question. We have seen that happen before, right? With past meetings where the Federal Reserve and its participants felt that the action we were seeing in the markets did not fully reflect the outlook for rates. So then that raises the question of, are we going to get different rhetoric here today from the Federal Reserve?

- Yeah, and it's to be determined. I'm looking at this good note from Goldman Sachs. I love their research. But this is the vibe coming into this Fed meeting. Goldman notes this, how many rate hikes will be needed to stay on this path is less clear. They expect to additional 25 basis point hikes in March and May, but fewer might be needed if a weak business confidence depresses hiring investment. Or more might be needed if the economy really accelerates. So it's just absolute confusion, I would say, into this meeting. And that ultimately falls on Jay Powell to come out here and just, I think, provide clearer market, clearer guidance to a market to Brad's point that just had a big Jan.

- Yeah, and so within that big Jan, what you had the absence of, as we've been discussing, was the Federal Reserve here? And of course, that meeting, that FOMC meeting kicking off on the 31st. And now, we'll get a decision here today on the 1st of February. One huge thing to continue to keep in mind going forward is, of course, not just how much of an out-sized impact any type of pause or pivot could have on the markets and the reaction that they may have in celebration. But then to the other side, what if the Fed goes against what that expectation is and actually is still remaining more aggressive almost kind of heeding the advice of the IMF?

- I mean, I think, I feel like that is kind of-- that is kind of the expectation at this point. I mean, it feels like the market is leaning a little bit more on hawkish expectation than dovish expectation. At this point, yes, we've seen the big January rally. But then over the past couple of days, we've seen a little bit of shakiness to that rally. So I do wonder if investors are sort of bracing themselves rather than thinking the Fed's going to-- I think, there's little chance that the Fed is going to signal an all clear here.

And I think execs are waiting too. And I know I'm guilty of this too. I always view that execs don't pay as much to the Federal Reserve as we here do in the business news community. But, you know, I spoke to Otis' CEO Judy Marks and she was she's paying very careful attention. They reported earnings this morning they beat, but they have very careful attention to the outlook for rates this year. And she made a good point that if rates continue to go up, it might impact their backlog and their business plans later this year in terms of new development. Not just here in the US, but Europe and certainly China.

- Well, that's kind of the sentiment that you heard even from the conversations you guys were having at Davos because from what the execs were somewhat signaling is that we can't really do anything about what the Fed is going to do. They're going to act as they feel necessary for the economy, but at the same time, we can be as proactive. And in some cases, they've been extremely reactive. But as proactive as we can in this instance, which means drumming up new business deals, which means some of the cost restructuring within our own company and corporation. And I think at this point too for what they're listening for from the Fed, it's more about how the demand environment can impact them if they continue to be hawkish or aggressive from the Fed. How that impacts their own consumers that they're going after right now too.

- Yeah.