Monthly Market Monitor: January 2012

Market Indices1NovemberYear-to-Date
S&P 500+4.48%+4.48
MSCI EAFE+5.35%+5.35%
MSCI Emerging Markets+11.36%+11.36%
Barclays US Aggregate Bond+0.88%+0.88%
Barclays Municipal+2.31%+2.31%
Barclays US Corporate High Yield+3.04%+3.04%

1 Morningstar Direct (all performance percentages are total return based, which include reinvested dividend, interest)

Despite month end profit-taking, global equity markets ended with their best January gains in 15 years. The S&P 500, a broad measure of U.S. equity performance, returned nearly 4.5% last month (including dividends). This marked its best monthly performance since October and best January gain since its 6.1% return in January 1997. Large-cap performance lagged that of small-cap companies as the Russell 2000 Index, a proxy of small-cap equity performance, returned over 7% in January. January's low-volume, low-volatility relief rally was largely fueled by generally improving U.S. economic sentiment, an improved outlook on China and an increased belief that European leaders are making the right decisions towards stabilizing their nearly three-year long debt crisis. Challenges remain however, as Europe's stalling economy and deep austerity measures enacted on its most highly indebted nations are both still viewed as the world's focal points of market uncertainty. Domestically, despite lower home prices and record low mortgage rates, the housing market remains sluggish.

In U.S. sector performance, seven of the ten S&P 500 major market groups delivered positive January returns with Materials (+11.2%), Financials (+8.1%), Technology (+7.6%) and Industrials (+7%) as the top performers. Cyclicals predominately outpaced defensive sectors as Utilities (-3.6%) and Consumer Staples (-1.5%) succumbed to profit-taking selling. Telecom (-2.7%) was January's second worst laggard. Partial, but notable credit for January's technology gains were due to Apple's stellar all-time-high quarterly earnings report. Apple, an S&P 500 index member, pushed the index's overall to-date 4Q earnings growth to over 11.5% from 2.7% growth without Apple's results. Similarly for Industrials, a 20% surge in Caterpillar shares contributed over one-third of the Dow Jones Industrial Average's 415-point January rally.

Non-U.S. developed equity markets outpaced domestic markets, serving up nearly 5.4% in positive performance last month, as measured by the MSCI EAFE Index. Emerging markets also had a solid month, with performance more than twice that of the U.S. benchmark. After falling nearly 20% last year, the MSCI Emerging Markets Index, a proxy for this asset class, rebounded sharply in January delivering positive returns of 11.36%, marking its best January performance since 2001.

Having noted the slower-paced nature of the U.S. economic recovery, the U.S. Federal Reserve announced on January 25th that it will keep its key overnight lending rate at near zero percent through at least late 2014. This together with the Fed's continuing "Operation Twist" bond swaps into longer dated debt has downwardly pressured 10-year Treasury yields to 1.79%, a four month low. Treasury Inflation Protected Securities (TIPs) gained 1.9% in January.

Investment grade bonds (excluding municipals) rose fractionally last month, returning 0.88% as measured by the Barclays US Aggregate Bond Index. Municipal bonds, as measured by the Barclays Municipals Index, returned 2.31% in January, its best monthly gain against Treasuries since 2009. This performance was partially driven by a rebound in U.S. state tax collections to their pre-recession levels. Non-investment grade corporate bonds returned 3.04% last month, according to the Barclays US Corporate High-Yield Index. Given the backdrop of near-record low Treasury yields, January's bond market gains were largely fueled by a diminished supply of new bonds and increased deposits into fixed-income funds.

This information is compiled by Cetera Financial Group. No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards.

Affiliates and subsidiaries and/or officers and employees of Multi-Financial Securities Corporation may from time to time acquire, hold or sell a position in the securities mentioned herein.

Solon Financial Group
6200 SOM Center Rd. B21 Solon, OH 44139
Phone: (440) 519-1838, (866) 517-7302 Fax: (440) 519-1878

Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC. Cetera is under separate ownership from any other named entity.

6200 SOM Center Rd, B21, Solon, OH 44139

Securities and advisory services offered through Registered Representatives of Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor.  Cetera is under separate ownership from any other named entity.

Individuals affiliated with this broker/dealer firm are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.

This site is published for residents of the United States only. Registered Representatives of Cetera Advisors LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Advisors LLC site at


The registered representative(s) and/or investment adviser representative(s) listed on this website are licensed and registered in the following states:

We are licensed to sell Insurance Products in OH,PA.

[ Online Privacy Policy | Important Disclosures and Form CRS | Business Continuity | Privacy Promise | Order Routing Disclosure | Cetera Advisors ]