Indexes Enjoy Best January in 15 Years

[Stocks-to-Watch]

On a percentage basis, this was the best January since 1997 for the Dow, S&P 500 and Wilshire 5000.

The Dow rose 3.4%, the S&P was up 4.4%, and the Wilshire 5000 jumped 4.9%.

Among the best performers were tech and bank stocks. Banks were up 8% for the month, with Bank of America (BAC) rising 28%. Tech stocks also rose 8% in the month, as Apple’s (AAPL) stellar earnings report earlier in the month helped lift the sector; Apple rose 13% during the month.

What’s changed since the end of December? Arguably, the debt situation in Europe appears more stable, and economic data points to slow but steady economic growth in the U.S. Fourth quarter earnings season, which began this month, has been mixed — as of this morning, 54% of companies in the S&P 500 had beaten analysts’ expectations, which is considered a “low beat rate” according to Standard & Poor’s.

When the Dow ends January higher, the index tends to end the year in the black 82% of the time.

But this year, some analysts have raised red flags about the rally, and warn that a slowdown could be coming. As Morgan Stanley analysts noted in a recent report, “junk”* stocks tend to rise in January. That’s not necessarily a prescription for a sustained rally.



Original Article Source by Barrons.com