Weekly Market Recap
Week ended January 27
Market-moving news
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Back on track
The NASDAQ surged more than 4% for its fourth positive weekly result in a row while the S&P 500 and the Dow posted smaller gains, rebounding from declines the previous week. With a couple trading days left in January, the NASDAQ was on track to record its strongest monthly result since last July.
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Subdued earnings
Nearly one-third of the way through earnings season, the proportion of S&P 500 companies that have beaten analysts’ earnings expectations is slightly smaller than usual. About 69% had exceeded net income expectations as of Friday, trailing the five-year average of 77%, according to FactSet. Overall, earnings are expected to decline 5% relative to a year ago.
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Growth's comeback
For the third week in a row, a U.S. large-cap growth stock benchmark outperformed its value counterpart by a wide margin, reversing the trend from 2022, when the value equity style dominated. Over the past three weeks, the growth benchmark gained 7.9% while its value counterpart added 2.1%.
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GDP momentum
U.S. economic growth remained in solidly positive territory in the fourth quarter of 2022, marking its second positive result after slightly negative numbers in the first two quarters of last year. GDP grew at an annualized rate of 2.9% in the latest period, beating most economists’ expectations. For full-year 2022, GDP rose 2.1%, easing concerns about the prospects of a protracted recession.
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Inflation easing
The U.S. Federal Reserve’s preferred gauge for tracking inflation showed a further cooling of price increases. The government reported on Friday that its Personal Consumption Expenditures Price Index rose at an annual 5.0% rate in December, down from 5.5% in November. Excluding food and energy, prices rose at a 4.4% annual rate—the lowest in 14 months.
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Shrinking margins
With the peak of quarterly earnings season at hand, profit margins continue to shrink amid high inflation. Margins for S&P 500 companies are forecast to average around 11.4% for the fourth quarter of 2022, according to FactSet. If that figure is maintained by the time all quarterly reports are released, it would mark the sixth quarter in a row of declining profit margins.
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Fed pivot?
At its next meeting ending on Wednesday, the U.S. Federal Reserve is expected to lift its benchmark interest rate again, but it's widely expected to hike by just a quarter of a percentage point rather than a half point. In 2022, the Fed approved seven rate increases, including a half-point hike in December, down from its previous three-quarter-point increases.
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Jobs ahead
A labor market update due out on Friday is likely to be the most closely watched economic report of the week. The release covering January follows a report that showed the economy generated 223,000 new jobs in December—the fifth consecutive month with jobs gains in the 200,000 to 300,000 range and the 24th month in a row with at least 200,000.
The week ahead: January 30-February 3
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Important disclosures
Unless otherwise noted, all data is from FactSet.
The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.
The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. The Bloomberg U.S. Aggregate Bond Index (Agg) tracks the performance of U.S. investment-grade bonds in government, asset-backed, and corporate debt markets. It is not possible to invest directly in an index.
The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS). One hundred basis points equals one percent.
Oil prices are represented by West Texas Intermediate (WTI) crude oil.
The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.
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Investment returns
Equities
U.S. equity size and style total returns as of 1/27/23 (%)
1 week
| 1.8 | 2.6 | 3.4 | Large | |
| 2.5 | 2.6 | 2.8 | Medium | |
| 2.2 | 2.4 | 2.5 | Small | |
| Value | Core | Growth | ||
YTD
| 4.8 | 6.5 | 8.3 | Large | |
| 7.3 | 7.6 | 8.2 | Medium | |
| 8.0 | 8.6 | 9.1 | Small | |
| Value | Core | Growth | ||
Index/market total returns as of 1/27/23 (%)
| Close | 1 week | YTD | |
|---|---|---|---|
| Dow Jones Industrial Average | 33,978.1 | 1.8 | 2.6 |
| NASDAQ Composite Index | 11,621.7 | 4.3 | 11.1 |
| S&P 500 Index | 4,070.6 | 2.5 | 6.1 |
| MSCI EAFE Index | 2,109.3 | 1.4 | 8.6 |
| Cboe Volatility Index | 18.5 | -7.0 | -14.7 |
International/developed (%)
| 1 week | YTD | |
|---|---|---|
| EAFE | 1.4 | 8.6 |
| Europe | 0.7 | 8.9 |
| France | 1.5 | 11.4 |
| Germany | 1.3 | 12.4 |
| Italy | 2.2 | 12.1 |
| Japan | 3.0 | 6.9 |
| Spain | 1.2 | 11.3 |
| Switzerland | 0.0 | 6.0 |
| U.K. | -0.2 | 6.8 |
Emerging markets (%)
| 1 week | YTD | |
|---|---|---|
| EM | 1.4 | 10.0 |
| Brazil | 2.2 | 5.9 |
| China | 3.2 | 17.2 |
| India | -3.6 | -2.4 |
| Indonesia | 1.8 | 4.9 |
| Korea | 4.7 | 16.6 |
| Mexico | 2.1 | 17.6 |
| Russia | -1.5 | 4.4 |
| Taiwan | 0.0 | 8.8 |
S&P 500 sectors (%)
| 1 week | YTD | |
|---|---|---|
| S&P 500 Index | 2.5 | 6.1 |
| Communication services | 3.3 | 15.0 |
| Consumer discretionary | 6.4 | 14.5 |
| Consumer staples | 0.4 | -2.0 |
| Energy | 0.8 | 4.3 |
| Financials | 2.5 | 6.0 |
| Healthcare | -0.8 | -2.2 |
| Industrials | 2.1 | 3.0 |
| Information tech | 4.1 | 9.9 |
| Materials | 0.7 | 7.4 |
| Real estate | 2.8 | 9.2 |
| Utilities | -0.5 | -2.3 |
Fixed income, currencies, and commodities
U.S. fixed-income style total returns as of 1/27/23 (%)
1 week
| 0.0 | -0.1 | 0.4 | High | Credit quality |
| -0.1 | 0.0 | 0.6 | Medium | |
| 0.4 | 0.4 | 0.3 | Low | |
| Limited | Moderate | Extensive | ||
| Interest-rate sensitivity | ||||
YTD
| 0.4 | 1.5 | 6.1 | High | Credit quality |
| 0.7 | 2.3 | 6.8 | Medium | |
| 2.5 | 4.0 | 5.0 | Low | |
| Limited | Moderate | Extensive | ||
| Interest-rate sensitivity | ||||
U.S. Treasury bond yields as of 1/27/23 (%)
| END OF WEEK | PRIOR YEAR END | YTD CHANGE (BPS) | |
|---|---|---|---|
| 2 Yr | 4.21 | 4.42 | -21 |
| 10 Yr | 3.52 | 3.88 | -36 |
| 30 Yr | 3.63 | 3.97 | -34 |
| 2-10 spread | -69 | -54 | -15 |
| 10-30 spread | 11 | 9 | 2 |
U.S. bond sector total returns (%)
| 1 week | YTD | |
|---|---|---|
| Aggregate | 0.1 | 3.0 |
| Bank loans | 0.3 | 2.6 |
| Convertible | 1.0 | 5.8 |
| Corporate | 0.2 | 4.0 |
| High yield | 0.4 | 4.0 |
| MBS | 0.2 | 3.5 |
| Municipal | 0.0 | 2.8 |
| Preferreds | 1.1 | 11.8 |
| TIPS | 0.5 | 2.4 |
| Treasury | 0.0 | 2.3 |
Global bond total returns (%)
| 1 week | YTD | |
|---|---|---|
| EM Local | 0.6 | 4.5 |
| EMD USD | 0.2 | 3.8 |
| Global Agg | 0.0 | 3.3 |
| Global Agg Ex-U.S. | -0.1 | 3.5 |
| Multiverse | 0.0 | 3.3 |
Commodities (%)
| 1 week | YTD | |
|---|---|---|
| BBG Com Ind | -0.4 | -0.7 |
| Oil (WTI) | -2.3 | -0.6 |
| Gold | 0.1 | 6.0 |
Currencies (USD) (%)
| 1 week | YTD | |
|---|---|---|
| EM FX | 0.8 | 3.5 |
| AUD | 2.1 | 4.6 |
| CAD | 0.7 | 1.6 |
| CHF | -0.2 | 0.2 |
| EUR | 0.1 | 1.6 |
| GBP | -0.1 | 2.7 |
| JPY | 0.0 | 1.5 |
GDP
Jobs
Inflation
Ex-U.S.
Regions/countries
| GDP Growth (%) annualized | Inflation Rate (%) CPI | Unemployment Rate (%) | 10-Year Government Bond (%) | Sovereign Credit Rating | |
| Eurozone | 2.3 | 9.2 | 6.5 | _ | _ |
| China | 2.9 | 1.8 | 5.5 | 2.99 | A+ |
| Germany | 1.3 | 8.6 | 5.5 | 2.25 | AAA |
| Japan | 1.5 | 4.0 | 2.5 | 0.48 | A+ |
| U.K. | 1.9 | 10.5 | 3.7 | 3.33 | AA |
Fund industry overview
Total net flows: open-end funds and ETFs as of 12/31/22 ($B)
| MONTH | 12 Month | ASSETS | |
| U.S. Equity | -29.2 | 29.9 | 10,625.6 |
| Sector Equity | -12.4 | -59.7 | 1,134.5 |
| Allocation | -12.6 | -69.8 | 1,263.1 |
| International Equity | -32.7 | -42.2 | 3,348.1 |
| Alternative | -3.7 | 22.3 | 155.2 |
| Commodities | -4.8 | -5.3 | 162.2 |
| Taxable Bond | -18.4 | -185.2 | 4,669.3 |
| Municipal Bond | -12.3 | -115.8 | 842.5 |
| Total all long-term funds | -127.8 | -404.8 | 22,347.4 |
Leading Morningstar fund categories by monthly net flows as of 12/31/22 ($B)
| MONTH | 12 Month | ASSETS | |
| Intermediate Core Bond | 9.5 | 19.9 | 1,098.8 |
| Long Government | 3.1 | 47.4 | 106.7 |
| Derivative Income | 2.2 | 24.2 | 42.7 |
| Target Maturity | 2.1 | 13.9 | 26.5 |
| Large Value | 1.8 | 36.4 | 1,599.6 |
Lagging Morningstar fund categories by monthly net flows as of 12/31/22 ($B)
| MONTH | 12 Month | ASSETS | |
| Large Growth | -15.4 | -66.4 | 1,817.8 |
| Foreign Large Growth | -10.7 | -44.9 | 440.5 |
| Foreign Large Blend | -8.7 | 29.6 | 1,243.3 |
| Short-Term Bond | -6.7 | -70.4 | 526.7 |
| High Yield Bond | -6.6 | -44.1 | 296.9 |
Important disclosures
Unless otherwise noted, all data is from FactSet.
The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. This does not illustrate the performance of any John Hancock fund. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.
The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. It is not possible to invest directly in an index.
The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (BPS). One hundred basis points equals one percent.
Oil prices are represented by West Texas Intermediate (WTI) crude oil.
The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.
