Dow finishes with best January since 1994
The blue chips just miss a 6% gain for the month. The S&P 500 gains 5%, its best January since 1997. Despite lots of headwinds, a good January for stocks could mean a good 2013.
The Dow Jones Industrial Average ($INDU) ended the day down 50 points to 13,861. That meant a 5.8% gain for the month and the best January performance for the blue chips since 1994 when the blue chips rose 6%.
The Standard & Poor's 500 Index ($INX) ended the month at 1,498, down 4 points on the day. However, it gained 5% for the month, its best January since 1997. The index had climbed 1,500 during the month, a level not seen since December 2007, but fell back Wednesday and Thursday.Flat on the day at 3,142, the Nasdaq Composite Index ($COMPX) closed up 4.1% for January. It had gained 8% in January 2012, thanks in part to a 12.7% gain for Apple (AAPL).
Apple dropped 14.4% this month, its worst January since 2008, when it fell 32%, and its fourth-worst January ever. The decline was a big reason that the Nasdaq lagged the Dow and S&P 500.
The January effect, according to the Stock Trader's Almanac, posits that a higher market in January (measured by the S&P 500) leads to a higher market for the year. It's been right roughly 75% of the time since 1950. One of the few misses came in 2009, when the S&P 500 fell 8.6% in January. The market bottomed in March and soared to a 23.5% gain for the year.
Another miss came in 2001, when the S&P 500 was up 3.5% in January but fell 13% for the year. The big catalyst was the after-effects of the Sept. 11, 2001, terror attacks. The market was also slumping after the dot-com bust.
There is some optimism about U.S. stocks, built around continued strong auto sales and the hope for a continued rebound in housing in 2013.
At the same time, there is lots of worry about the market just now. The market is pricey by many measures. I see it in the 14-day relative strength indices for the major averages.
You can see the S&P 500's RSI here. It ended the day at 74.11, down from Wednesday's reading of 83.48.
Also a worry for many is the economic effects of possible "sequestration" -- the automatic spending cuts across the federal government required under the 2011 budget deal. They're supposed to kick in on March 1.
The Dow and S&P also had their both months since October 2011; the Nasdaq's gain was
its best since February 2012 when it rose 5.4%.
The Dow's winners in January were Hewlett-Packard (HPQ) and Procter & Gamble (PG), up 15.9% and 10.7%, respectively. The laggards were Bank of America (BAC) and Boeing (BA), down 2.5% and 2%, respectively.
The S&P 500 winner by far was Netflix (NFLX), up 78.9%, followed by potential buyout candidate Best Buy (BBY), which gained 37.3% and and Pitney Bowes (PBI), up 37.2% Apple was the S&P 500 laggard, followed by Family Dollar Stores (FDO) and Monster Beverage (MNST), down 10.6% and 9.4%, respectively.
Life Technologies (LIFE), up 32%, and Dell (DELL), up nearly 31%, were the leaders of the Nasdaq-100 Index ($NDX), which tracks most of the largest Nasdaq stocks. Apple is the laggard. Eighty-five stocks in the index look to finish higher. The index was was up 2.7% for the month.
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