January Market Recap
Happy Groundhog Day to all the readers of this monthly recap. You are not stuck in a recurring time-loop. Stocks really did go up again last month. Going back to May of last year, the Dow Jones Industrial Average has increased nine months in a row.
All three major US equity benchmarks moved higher in January, which historically has been a bullish indicator for the year ahead. Since 1950, the S&P 500 has been positive in January 46 times. In the ensuing 11 months, stocks finished higher 87% of the time.
Seeing the major indices near record levels may feel familiar, but the types of stocks leading the charge were noticeably different last month. Energy (+14.4%) was far and away the best-performing sector in January. Materials (+8.7%) and Consumer Staples (+7.5%) also had strong months. Financials (-2.6%), Technology (-1.7%), and HealthCare (-0.2%) were negative.
Benchmark Returns: January 2026 | YTD 2026
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Dow Jones
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S&P 500
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NASDAQ
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+1.73% | +1.73%
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+1.37% | +1.37%
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+0.95% | +0.95%
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|---|
It’s been a recurring theme over the last decade that the largest companies in the S&P 500 have delivered a disproportionate percentage of the market’s overall gains. Whether it’s the now retired “FAANG” acronym (Facebook, Amazon, Apple, Netflix, and Google) or the more contemporary “Mag 7,” big technology stocks have fueled the benchmark higher.
That trend lost some steam in January. Strong performance last month from sectors that lagged in 2025 demonstrates a broadening of participation in this bull market. That’s a good sign for the overall economy. The efficiency gains and profit margin expansion being driven by A.I. (Artificial Intelligence) are real, but we also feel a pause in the tech surge is healthy. It’s not a bad thing to see the “S&P 493” outperform for a change. Small-cap equities also enjoyed a strong month with the Russell 2000 rising 5.3%.
The Federal Reserve made no changes to interest rates following its January 28 meeting, which means the Fed Funds rate remains at 3.50% to 3.75%. More notable was the news that President Trump will nominate Kevin Warsh as Fed Chair to replace the incumbent Jerome Powell, whose term ends on May 15.
Warsh has been a research fellow at Stanford University’s Hoover Institution for the last 15 years. He served on the Federal Reserve’s Board of Governors from 2006-2011 and was the youngest person ever (35 years old) in that role at the time of his 2006 appointment by former President George W. Bush. Given Trump’s stated preference for lower interest rates, it is expected Warsh will advocate for accommodative monetary policy in his early years as Fed Chair.
Geopolitics made some big headlines last month as global political leaders met in Davos, Switzerland, at the annual World Economic Forum. Trump’s rhetoric about the United States purchasing Greenland led to strong rebukes from NATO allies, then threats of 10-25% tariffs against several European countries.
Not unrelated to those tensions was a continued devaluation in the US dollar. The dollar fell 3% in a week’s time versus global currencies in late January. This, on the heels of a 10% slide last year.
A falling dollar remains a boon for the performance of international equities. Non-US Developed Markets outperformed in January, gaining 4.9% and continuing a trend from last year. Emerging Markets increased 8% last month.
January ended with our federal government on the verge of another shutdown with lawmakers at odds over the latest government spending bill. It has been less than three months since the previous shutdown, which lasted 43 days, although it’s worth pointing out that the S&P 500 increased 2% during that span. Federal shutdowns, while regrettable, have not been overly disruptive to financial markets.
Ten-year US Treasury bonds ended January yielding 4.24%, up slightly from a month earlier (4.16%). Gold prices reached record levels (above $5,600/ounce) in late January before falling 13% in the final two days of trading.
Ben Marks
Chief Investment Officer
Brett Angel
Senior Wealth Advisor
Investment Advice offered through Marks Group Wealth Management, a Registered Investment Advisor.
Marks Group Wealth Management performs in-house analysis on companies. Statistical information on mentioned companies is obtained from company reports, news releases and SEC filings. The information set forth herein has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and does not purport to be a complete analysis of the securities, companies or industries involved. Opinions expressed herein are subject to change without notice. Additional information is available upon request.
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Stock investing involves market risk including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. International and emerging market investing involves special risks such as currency fluctuation and political instability. These risks are often heightened for investments in emerging markets. No strategy assures success or protects against loss. Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Past performance is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.
Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price to-book ratios and higher forecasted growth values.
Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
MSCI EAFE Index consists of the following developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
VIX-The Chicago Board Options Exchange’s CBOE Volatility Index, a popular measure of the stock market’s expectation of volatility based on S&P 500 index options. It is calculated and disseminated on a real-time basis by the CBOE, and is often referred to as the fear index or fear gauge.
