Monthly Market Monitor - January 2015 Recap

Market Indices1JanuaryYear-to-Date
S&P 500-3.00%-3.00%
Russell 3000-2.78%-2.78%
MSCI EAFE0.49%0.49%
MSCI Emerging Markets0.60%0.60%
Barclays US Aggregate Bond2.10%2.10%
Barclays Municipal1.77%1.77%
Barclays US Corporate High Yield0.66%0.66%

  • Europe’s central bank announced a 1 trillion 1 ½ year bond purchase stimulus program.
  • WTI crude oil fell $5.46/barrel in January, extending a seven-month price collapse to 52%.
  • The S&P 500 fluctuated by a 0.92% daily average in January, nearly double the 0.53% daily average during all of 2014.

U.S. equities tumbled in January with all three major indices suffering their worst monthly declines since January of last year. Following a 13.7% 2014 return, the S&P 500 fell 3% last month, whereas a year ago in January the index fell 3.5%. Investor sentiment cooled last month as concerns mounted that slowing overseas growth, together with plunging oil and a strong US dollar are hurting the domestic economy. The S&P 500 fell 1.3% on the last day of January after investors learned the U.S. GDP grew by 2.6% during the fourth quarter, missing estimates and slowing from third quarter growth of 5%. For all of 2014, the economy expanded by 2.4% versus 2.2% growth in 2013. Crude oil futures fell another 10% in January, a seventh straight monthly decline, falling $52.12 per barrel since its most recent $100.36 peak on June 25, 2014. Meanwhile, relative to major world currencies, the US dollar is at its strongest level in over a decade, making American exports more expensive and thus less attractive. The Dow Industrials shed 658 points (-3.6%) during the month, while the NASDAQ Composite declined 2.1%.

Volatility returned with eight of January's 20 trading sessions producing 1% or greater moves on the S&P 500, three of them over 1.5%. Small-cap stocks, as measured by the Russell 2000 Index, underperformed large-caps, falling 3.2% in January. Mid-cap stocks fared better, with the Russell Mid Cap Index declining 1.6%. The Russell 1000 Growth Index fell 1.5% last month, while the Russell 1000 Value Index sank 4%.

Eight of the ten major equity sectors ended lower in January, led by Financials (-6.9%), Energy (-4.8%) and Technology (-3.9%). Utilities, the best performing sector last year up 29%, extended gains by 2.4% last month. Healthcare (+1.2%) also outperformed. Commodities lagged behind stocks and bonds in January with the Bloomberg Commodity Index falling for a seventh month, retreating 3.3%.

The MSCI EAFE Index, a broad measure of 21 global developed markets outside of the U.S. and Canada, gained 0.5% last month. The MSCI Emerging Market Index, an index representing 23 emerging nations' economies, also outperformed the U.S., returning 0.6%.

Treasuries, as measured by the Barclays U.S. Government Bond Index, returned 2.5% in January, its best start to a year since 1988. During the month, 10-year U.S. Treasuries rallied in price by nearly five points, sending its yield down more than 53 basis points to 1.64%, its lowest yield since May 2013 and the lowest in any January since 1988.

U.S. investment grade government, corporate and agency-backed bonds, as measured by the Barclays U.S. Aggregate Bond Index, returned 2.1% last month. The Barclays U.S. Corporate High Yield Index, a proxy for non-investment grade corporate bonds, gained 0.7%. Extending a 9.1% 2014 gain, the Barclays Municipal Bond Index returned 1.8% in January, its thirteenth consecutive monthly gain.

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

This information is compiled by Cetera Investment Management.

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