MW The 'January barometer' for stocks comes with a big asterisk this year
By Joy Wiltermuth
If the first month of 2026 can be any guide to the rest of the year, investors should buckle up
A wild January ended with a thud this year.
It's tough to say anything was typical about this January. Yet if the first month of 2026 can be any guide to the rest of the year, investors might want to buckle up.
Crowded trades felt sharp moves up and down during the month, the dollar DXY briefly sank to a four-year low and several darlings of the artificial-intelligence trade saw their stock prices punished by good - but apparently not good enough - earnings.
Microsoft $(MSFT)$ shares fell 11% in January, while those of Apple $(AAPL)$ shed 4.6% and Tesla's stock $(TSLA)$ dropped 4.3%, according to FactSet.
Read: Microsoft's stock may be 'dead money' even after historic $357 billion market-cap wipeout
On the flip side, Meta Platform $(META)$ shares gained 8.6% in January, while those of Google parent Alphabet $(GOOGL)$ $(GOOG)$ rose 8%.
"Investors already priced in a lot of upside to stocks associated with the AI theme," said Jim Baird, chief investment officer at Plante Moran Financial Advisors.
Despite the tug of war in tech, the S&P 500 index SPX still managed to log a 1.4% gain in January.
"That usually bodes well for the year," Baird said.
'January barometer'
Small-cap stocks tend to outperform their large-cap counterparts in the first month of a new year, a trend that's commonly referred to as the "January effect."
The Russell 2000 index RUT dropped 1.6% Friday, as U.S. stocks ended a turbulent week lower. The index still gained 5.3% in January, outperforming the S&P 500, the Dow Jones Industrial Average's DJIA 1.7% advance and the Nasdaq Composite's COMP 1% climb for the month.
Investors also tend to focus on the "January barometer" and its associated saying: "As goes January, so goes the year."
Sam Stovall, chief investment strategist at CFRA Research, told MarketWatch on Friday that the January barometer "has a pretty good track record" - noting that since 1945, whenever the S&P 500 has ended January with gains, the market on average increased 16.2% that year, versus an average annual advance of 9.3%.
Still, it hasn't been "a typical January," Stovall said - citing President Trump's moves in Venezuela, the White House's brief threat to apply new tariffs against European allies over Greenland, and now the "increased sounds of war drums as it relates to Iran."
"But then again," he added, "it's not a typical administration."
Metals mayhem
The other crucial difference this January has been the wild climb in gold (GC00), silver (SI00) and copper (HG00) prices, until they lurched lower Friday.
"We've seen parabolic moves in gold and silver," said Ron Albahary, chief investment officer at Laird Norton Wetherby. "Once you start seeing the chart go straight up, then you have to think it's almost a loaded weapon."
Gold prices still gained for seven straight months in a row through January, while silver advanced for nine consecutive months for its longest such win streak on record, according to Dow Jones Market Data, based on the most active contracts.
See: Silver suffers biggest drop in 46 years, with 'every man and his dog rushing for the exit'
"I wouldn't be chasing that," said Talley Léger, chief market strategist at the Wealth Consulting Group, noting that any pickup in consumer sentiment based on a reaccelerating economy could crush gold prices. "I think that's one very simple way gold should lose its luster."
The other thing investors were contending with Friday was what to make of Trump's pick of Kevin Warsh as his nominee to replace Federal Reserve Chair Jerome Powell when his term ends in May.
"The new pick for Fed chair doesn't change things that much," said David Kelly, chief global strategist at J.P. Morgan Asset Management, adding that people tend to forget the chair is only one voice within a larger policy-setting committee.
Furthermore, he doesn't see anything in the economic, financial markets or fiscal backdrop that suggests the central bank should be cutting interest rates aggressively.
What does Kelly make of the rise in gold and silver? "Let's not pretend this is something rational or calibrated," he said. "It's really the latest speculative bet."
-Joy Wiltermuth
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 31, 2026 09:30 ET (14:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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