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Monthly Market Wrap-up: January 2021

Welcome back to the Monthly Market Wrap-up from YCharts, where we break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.

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As January draws to a close, most of us are forced to come to terms with the fact that we’ve already broken our New Year’s resolutions—or never even started one. And of course, plenty of people started their resolutions to get fit or get outdoors months ahead of schedule, when stay-at-home orders and social distancing first began in 2020. 

On the backs of our best intentions, names like stationary bike maker Peloton Interactive (PTON), cycling gear company Shimano Inc (SMNNY), and high-end cooler pioneers YETI Holdings (YETI) have continued to set new all-time-high prices into 2021.

PTON YETI SMNNY chart

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Also this month, new White House tenant President Joe Biden and his administration are optimistic about putting the novel coronavirus to bed in the United States. However, newly-identified virus strains, reimposed lockdowns, crippling travel restrictions, and slower-than-expected vaccine rollout and adoption indicate the virus isn’t going anywhere anytime soon, lingering over investors’ heads. To kick off 2021, we’ll focus on these key developments from January:

Off the YCharts! The Great Short Squeeze of 2021

Major Index Returns: Kicking the Year Off Slowly

Sector Movement: 4 out of 11 Winners in January

Hot Stocks of the Month: More Cable Co’s in Streaming

Laggards & Losers: Booking, Entertainment Fallout

Economic Data: Bringing Down the Houses


Off the YCharts! The Great Short Squeeze of 2021

As if 2020 wasn’t a wild enough year for investors, the waters were not much calmer to start 2021. In a battle that started on Reddit forums and soon dominated CNBC headlines, retail traders set out to trigger a short squeeze in heavily bet-against names such as GameStop (GME), AMC (AMC), BlackBerry (BB), Bed Bath & Beyond (BBBY), and others. Read more details and get advisor-client talking points in our recent blog, The Reddit Trader Short Squeeze…

GME SPY price action chart

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Major Index Returns: Kicking the Year Off Slowly

Major index chart

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The S&P 500 lost 1.01% on a total return basis in the first month of 2021, taking a breather from its 18.4% total return in 2020, and 70.2% rise from the March 23rd bottom through year end. Emerging Markets outperformed the other major indices, gaining 3.1% in January, and High yield corporate bonds rose one-third of a percent while the Global Aggregate Bond Index fell 0.9%.


Sector Movement: 4 out of 11 Winners in January

stock sectors chart jan 21

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Sector performance was also less than noteworthy to open 2021. Energy finished as January’s leading sector, rising as much as 16% before pulling back to end the month up 3.8%. Energy was similarly volatile in December 2020. Seven of the 11 sectors ended January in the red, with consumer staples posting a 5% decline.


Hot Stocks of the Month: Ten Best Performers

top 10 stocks january 21

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A crowd of Communication Services stocks led the S&P 500 in January, with Consumer Cyclical and Energy rounding out the top ten. Two more traditional cable companies,  Discovery (DISCA) and ViacomCBS (VIAC), launched their respective streaming services discovery+ and Paramount+, sending shares of those companies higher. Auto manufacturers General Motors (GM) and Ford (F) also got a lift as talk of electric vehicles spread in Detroit Motor City—more competition for Tesla (TSLA) of Fremont Battery City.

(If you’re wondering where GameStop (GME) and AMC (AMC) are, please note our “Ten Best” and “Ten Worst” tables examine only S&P 500 companies.)


Laggards & Losers: Ten Worst Performers

worst 10 stocks january 21

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Business leaders in the travel industry could use a vacation, but January wasn’t their month for R&R. After getting bumped to coach for most of 2020, shares of Booking Holdings (BKNG), Royal Caribbean Group (RCL), and Carnival Corp (CCL) all lost at least one-eighth of their value in January, while hotel and casino operator Las Vegas Sands Corp (LVS) logged the worst performance of all S&P 500 stocks. Payment companies Global Payments (GPN) and Paycom Software (PAYC) cooled off significantly from their recent strong performance.


Financial Market & Advisor News

Finra zeroes in on online brokerage apps (InvestmentNews)

Warren to Join Senate Finance Committee, Introduce Wealth Tax (ThinkAdvisor)

New on YCharts: Custom Securities (YCharts)

ARK Mania Finally Fading After GameStop Fever Sweeps Wall Street (WM.com)

Biden’s SEC to Zero In on Broker-Dealers, RIAs: Law Firm (FA-IQ)

2020 Fund Flows: Active vs Passive, Thematic ETFs & More (YCharts)


Economic Data: Bringing Down The Houses

Employment

Jobs data was nearly flat month over month. December’s unemployment rate stayed level at 6.7%, the first print since May that wasn’t lower than the previous month’s. More of a mixed bag, initial jobless claims rose early in January but then fell to 779k, near its lowest since covid-19 first reared its ugly head.

Production and Sales

US Retail and Food Services Sales fell 0.7% in December, the third straight month-over-month decline for the indicator, and durable goods orders were barely positive, up 0.16% in December from November.

Housing

US New Single Family Houses Sold came back from a -12.6% November to rise 1.6% in December, but Existing Home Months’ Supply is at its lowest level since 1999: 1.9 months. The US house price index climbed 1.0% in November, now its sixth straight month of 1% growth or better.

Housing price index and supply chart

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Consumers

Prices and spending both showed healthy growth in December 2020. The US Consumer Price Index rose 0.37% while consumer spending (PCE) increased by a similar 0.40%, the best month since June 2020 for PCE.

 

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