Resilient U.S. Economy Fuels Best January For Stocks in 30 Years Gains by banks and small caps helped lift the Dow and S&P to their best starts since the 1980sBy Amrith Ramkumar
https://www.wsj.com/articles/resilient-u-s-economy-fuels-january-stock-market-recovery-11548939600?mod=hp_lead_pos1
Banks and smaller companies that were among the market’s laggards last quarter have helped stocks to their best January in 30 years, a sign investors are favoring sectors tied to the U.S. economy.
Despite a modest performance from U.S. indexes Thursday, the Dow Jones Industrial Average and the S&P 500 both closed the month with their biggest January gains since the 1980s. The industrial average’s 7.2% rise was its best January performance since 1989, while the S&P’s 7.9% advance was its best start to a year since 1987.
Through Wednesday, the KBW Nasdaq Bank Index had risen 14% this month, on track for its best-ever start to a year. Meanwhile, the Russell 2000 index of small-capitalization companies—many of which are domestically focused—was heading for its best January since 1987, with a 10% advance.
The reversal shows that investors who were bracing for a sharp slowdown in U.S. economic activity have been soothed by cautious comments from the Federal Reserve, signs of strength in the labor market and data pointing to tepid inflation.
Although lukewarm economic activity in Europe and China has clouded the outlook for global growth and hurt multinational corporations reliant on trade flows, companies from banks to industrial firms have said U.S. consumer demand remains resilient. CONTINUE AT SITE
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