Monthly Market Update - January 2025

Listen to Monthly Market Update - January 2025Olivia Countiss

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Countiss Wealth Management - Monthly Market Update - January 2025 - https://www.youtube.com/watch?v=K3bb_GopaoA

Summary:

January 2025 saw strong market gains, with the S&P 500 up 2.8%. Communication Services (+9.1%) and Health Care (+6.8%) led, while Tech dipped (-2.9%). International stocks performed well, with Europe leading. Bonds saw modest gains as Treasury yields remained steady. Commodities surged, with gold (+7.7%) and silver (+9.3%), while Bitcoin jumped 8.7%. Industrial REITs climbed 10.1%, but office REITs struggled. As February unfolds, diversification remains key amid market uncertainties.

Chart 1: S&P Index and Sectors Return for January 2025

The markets kicked off 2025 on a strong note, with the S&P 500 rising 2.8% in January, continuing last year’s momentum. However, gains varied by sector. Communication Services led with a 9.1% rise on strong advertising revenue, while Health care jumped 6.8%, driven by strong pharmaceutical earnings. Most other sectors also posted solid gains. On the other hand, the Technology sector saw a slight pullback, down 2.9%, as investors took profits after a stellar 2024. The ‘Magnificent Seven’ stocks saw mixed performance—Meta soared 17.7%, Amazon climbed 8.3%, but NVIDIA and Apple declined on sales and supply chain concerns.

Table 1: International Developed Market Stocks

Outside the U.S., international developed market stocks outperformed, with the MSCI EAFE Index up 5.3%, with European economies leading gains. Emerging markets were more muted – up 1.8% - despite Brazil being up 12.4%, as India was down 3.5%, and China was only up 1%.

Chart 2: 10-year Treasury Yield

Treasury yields remained fairly steady during January, bouncing around within a range of about 4.5% to 4.8%. This resulted in modest gains for bond markets, with the Bloomberg U.S. Aggregate Bond Index up 0.5%. Riskier bond categories like US high yield and emerging market debt outperformed the US investment grade market.

Commodities: Gold and silver rise with Bitcoin; oil steadies amid unrest, while REITs thrive despite mixed real estate.

Commodities had a strong month—gold surged 7.7%, silver gained 9.3%, and oil remained stable amid geopolitical uncertainty. Meanwhile, Bitcoin rallied another 8.7%.

In real estate, industrial REITs surged 10.1%, benefiting from strong warehouse demand, while office REITs saw mixed performance, with high vacancy rates still weighing on parts of the sector.

As we step into February, markets are understandably nervous with the imminent application of US tariffs and global uncertainties underscore the need for diversification. The trajectory of interest rates and key developments in the technology and AI sectors will also be closely watched, as they may shape the next phase of market movements.

With elevated valuations and sector volatility, staying diversified across regions, sectors, and asset classes remains key. Avoiding reactionary moves and maintaining a long-term strategy will be key to navigating the months ahead.