NEW YORK, January 26, 2024 – Gold’s overnight surge past $4,500, though it later retreated, signals a continuing appetite for risk assets and safe havens alike. The January equities rally is still underway, but a closer look reveals a more nuanced picture than simple gains suggest.
A Tale of Two Markets
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The market is showing strength in tech and commodities, but consumer spending remains a concern.
Year-to-date, the NASDAQ is essentially flat, while the Dow Jones Industrial Average has climbed 2.3%, and the S&P 500 is up 0.6%. The equally-weighted S&P has seen a 1.9% increase, and the Russell 2000 is leading the charge with a 2.4% gain. However, the high-flying “Magnificent 7” stocks are down 1.1% for the year. Looking back twelve months, the NASDAQ is now outpacing the Magnificent 7 (+18.1% versus +16.1%). NVIDIA has surged 27.1% over the last year, and the semiconductor sector is up a remarkable 48.4%.
Sector Performance: Tech Shines, Consumers Stumble
Only three sectors have posted gains of 14% or more over the last twelve months: technology (+24.4%), industrials (+20.3%), and communication services (+20.3%). Consumer discretionary (+6.9%), energy (+5.4%), and real estate (+0.2%) are showing single-digit growth. Consumer staples are the only sector in the red, down 0.9%. The relative weakness in consumer sectors is somewhat troubling, while declining energy prices are a positive sign for inflation. Weakness in real estate, however, reflects the impact of rising interest rates on previously low-cost financing.
Interest Rates and the Dollar
Interest rates are creeping higher again, with the U.S. 2-year Treasury yield up over 2 basis points to 3.48% and the 10-year yield rising 2 basis points to 4.19%. International yields are generally lower, increasing by 2-3 basis points, with Japan being the notable exception. The 10-year Japanese yield has hit a new high above 2.13%. The U.S. dollar index is modestly higher at 98.3, but remains below its early December peak above 99.
Commodities and Crypto on the Move
Silver has broken through $80 per ounce, gaining another 4.5% today, with reports indicating higher physical prices in Asia. Copper has reached a new high above $6 per ounce, up 11% in a month. Platinum is up 5.6%, nearing its all-time high. Crude oil is holding steady at $58 per barrel, gasoline prices are flat, and natural gas is down 3.8% to below $3.40 per million cubic feet—a drop of over 33% in a month. Bitcoin is also holding onto gains, trading at $93.3K after reaching $94.4K overnight, up 5.1% in a week.
Mid-Day Shift and Sector Trends
As the trading day progresses, the morning rally is losing some steam. The Dow is still up 0.4%, and the equally-weighted S&P is up 0.7%, but the NASDAQ is almost flat. The Magnificent 7 are down 0.6%, with only Amazon and Nvidia remaining in positive territory.
Semiconductors are still performing strongly, up 2.6% today. The market-weighted S&P is up less than 0.2%, and the Russell 2000 is nearly flat. While the rally is moderating, the broad-based movement is a positive development, and the overall trend remains upward.
- Tech and semiconductors are leading the market gains.
- Consumer sectors are lagging, raising concerns about spending.
- Precious metals and crypto are experiencing significant surges.
- Interest rates are rising, impacting real estate.
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