The Monthly Market Wrap provides an insightful analysis of treasury yields, fixed income performance, mega-cap stocks, and key economic indicators in January 2024. It also delves into housing market data and the performance of commodities.
Key Stock Market Index Performance
Equities rallied across the board as the NASDAQ led the way with a 6.2% gain. Both the Russell 2000 and Russell 1000 posted gains of around 5.5%, and the S&P 500 advanced 5.3%. The Dow Jones Industrial Average was the relative laggard but still rose 2.5%.
All eleven sectors advanced higher in February. Consumer Discretionary led the way with a 7.9% gain, followed by Industrials at 7.2% and Materials which charged 6.5% higher.
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Economic Data
Employment
January’s unemployment rate stayed unchanged at 3.7%, as did the labor force participation rate at 62.5%. The US unemployment rate has now come in at 3.7% for three consecutive months.
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Inflation vs. Fed Funds Rate
The US inflation rate for January increased slightly to start the year, to 3.09%. Inflation has hovered in the 3 percent range since July, though it just logged its lowest YoY level since then. Core Inflation decreased slightly to 3.86% in January, nonetheless logging its 10th consecutive monthly decline. The monthly US Consumer Price Index rose 0.3% in January, and monthly US Personal Spending inched up 0.2%.
The Federal Reserve held its key Fed Funds Rate at 5.50% at its January 31st, 2024 meeting, marking the Fed’s fourth consecutive meeting in which rates were left unchanged.
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Housing Prices and Mortgage Rates
MoM US New Single-Family Home Sales increased 1.5% in January, and MoM US Existing Home Sales increased by 3.1% to 4.00M in January. The Median Sales Price of Existing Homes fell 0.6% to $379,100 in January, a seventh straight monthly decline putting it 7.6% below its all-time high set in June 2023.
Mortgage rates increased slightly in February; the 15-year Mortgage Rate rose to 5.94% as of February 29th, and the 30-year ended the month at 6.94%.
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Oil and Gas Prices
Crude oil prices continued higher in February; the price of WTI was 3% higher at $78.53 per barrel while Brent rose 1.2% to $84.01 both as of February 26th. Higher oil prices led the average price of gas to increase 13 cents per gallon in February, closing the month at $3.37 per gallon.
Fixed Income
Treasury yields rose across the board even as equities rallied. Intermediate duration instruments posted the largest increases; the 2-year, 3-year, and 5-year all increased by 35 bps or more.
Bond ETFs largely mimicked their January performances in February. The short-term SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) and iShares Boxx High Yield Corporate Bond (HYG) both inched higher. In long-term bonds, the iShares 20+ Year Treasury Bond ETF (TLT) fell 2.3% for the second straight month.
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