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HomeMarketJanuary Has Turned Last Year’s Losers into Winners. Can It Last?

January Has Turned Last Year’s Losers into Winners. Can It Last?

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There’s an adage coined by Yale Hirsch, the founder of the Stock Trader’s Almanac: “As goes January, so goes this year.”

That’s got to sound promising to investors. The S&P 500 is up almost 5% in the first month of the year after a miserable performance in 2022. The technology-heavy Nasdaq has gained almost 9%.

Leading the comeback are some of the worst hit by the market slump last year. Tech giant Salesforce is up 24.2% since Jan. 1, the best month since August 2020, helped higher by a big round of job cuts and the arrival of a slew of activist investors.

Other winners this month include Micron Technology, up 24.3%, and chemicals company Dow Inc., which has gained 17.1%. Both are the best monthly gains since 2020.

The S&P 500 appears to have hit a bottom in mid-October. Perhaps not coincidentally, the International Monetary Fund has upgraded its forecasts from that month. Whereas a world recession was seen as a risk just a few months ago, now it appears unlikely.

But there are still plenty of potential roadblocks that could stop the comeback in its tracks. Despite lots of anecdotal evidence of job cuts, overall the labor market still looks strong. If that keeps inflation sticky over the next few months, the Federal Reserve will have to keep rates higher for longer. That’s the main question for Chairman Jerome Powell at Wednesday’s press conference.

Other factors could also keep prices rising faster. Energy prices could spike back up. China’s reopening after years of Covid-19 lockdowns could be bumpy, possibly disrupting supply chains again.

But for now, fingers crossed that as January goes, so goes the rest of the year.

Brian Swint

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IMF Raises Global Forecast and Says Recession Unlikely

The outlook for the global economy has brightened over the past few months as inflation has slowed, the International Monetary Fund said.

  • The IMF upgraded its forecast for world growth to 2.9% from a previous prediction of 2.7% in October. It sees the expansion accelerating to 3.1% in 2024. In 2022, it estimates the world economy grew 3.4%.

  • Since the last forecasts, prospects have been lifted by a resilient third quarter, still-tight labor markets, and strong spending by households and businesses, the IMF said. Price gains are slowing after energy prices retreated in the second half, and after the most aggressive campaign of interest-rate hikes in a generation.

  • It predicts the U.S. economy will grow 1.4% this year, down from 2% in 2022. The euro-area rate will drop to 0.7% from 3.5%, while it sees the U.K. as the only major advanced economy that will contract in 2023.

What’s Next: A global recession is unlikely, said IMF Chief Economist Pierre-Olivier Gourinchas. That’s a different tone from the outlook given in October, though resurging inflation and an escalation in Russia’s war in Ukraine remain risks.

Brian Swint


Ford Cuts Prices for Mustang EV After Tesla Reductions

Ford Motor Company
cut prices for its Mustang Mach-E electric vehicle (EV) weeks after
reduced tickets on some of its own models. Ford said the price cuts are to stay competitive as the supply chain for its electric vehicles comes online, seizing on streamlined costs, The Wall Street Journal reported.

What’s Next: Berenberg analyst Adrian Yanoshik upgraded shares of Tesla to Buy from Hold and downgraded shares of General Motors to Hold from Buy. With affordability and demand concerns adding to supply-chain risks, he thinks softer demand in 2023 is “increasingly likely.”

Al Root and Janet H. Cho


Chip Makers Under Scrutiny Amid Demand Struggles, Rising Inventory

Memory-chip prices, already down sharply, are expected to keep falling in the first half of 2023, further pressuring an industry that has cut spending and jobs, The Wall Street Journal reported. Wall Street has grown nervous about the semiconductor industry after
reported demand struggles and swelling inventories.

  • NXP Semiconductors
    forecast first-quarter earnings of $2.82 to $3.22 a share on revenue of $2.9 billion to $3.1 billion. Analysts surveyed expected $3.14 a share on revenue of $3.17 billion, according to FactSet.

  • NXP derives more than 50% of its revenue from supplying chips to the auto industry. Fourth-quarter revenue rose to $3.31 billion as sales of auto chips rose 17% to $1.81 billion from a year ago, this met expectations.

  • Advanced Micro Devices
    reports earnings today after the closing bell. Wall Street expects revenue of $5.51 billion with adjusted earnings per share of 67 cents for the December quarter. The estimate for the current quarter’s revenue is $5.5 billion and earnings per share of 68 cents.

  • Weak PC demand could affect AMD as it did Intel. But the big question for investors is whether AMD’s strength in server processors and cloud computing can make up for some of that softness.

What’s Next:
Micron Technology,

SK Hynix,

Western Digital,
and Kioxia Holdings have revealed plans to cut their spending on capacity expansion or to lower their output to address a worsening supply glut, the Journal reported. But Samsung bucked the trend Tuesday despite reporting its weakest quarterly profit in eight years.

Liz Moyer and Tae Kim


Johnson & Johnson’s Move to Push Talc Lawsuits Into Bankruptcy Court Rejected

Johnson & Johnson
shares fell 3.7% on Monday after a panel of federal appeals judges rejected its effort to push lawsuits over its talc-based baby powder products into bankruptcy court. Johnson & Johnson has vowed to challenge the court’s decision.

What’s Next: The future of J&J’s talc strategy and new publicly traded company, Kenvue, remains unclear. Cantor Fitzgerald analyst Louise Chen wrote Monday that investors are asking, among other things, whether the development could impact or delay plans for the Kenvue spin out.

Josh Nathan-Kazis and Janet H. Cho


‘Super Bowl Foods’ Are Less Expensive This Year, Says Wells Fargo

Even if their favorite team fell short, Super Bowl fans have a reason to cheer ahead of the big game on Feb. 12. Although food prices have risen 10.4% over the past year, prices for watch party favorites chicken wings and avocados have dropped by double digits, according to Wells Fargo’s annual survey.

  • The nation’s chicken supply is at its highest level since early 2019, and chicken wing prices are down by 22% from last year’s Super Bowl, Wells Fargo said. Retail prices for whole chicken wings dropped from $3.38 a pound last year to $2.62 a pound last week.

  • Sirloin steak prices are down almost $1 a pound since December 2021, according to Wells Fargo Chief Agricultural Economist Michael Swanson. Shrimp and bacon are also less expensive, and the price of hamburgers is down from its Fourth of July high.

  • Avocado prices are down 20% because of a larger crop and better management. But beer prices are 11% higher, wine is up 3%, spirits are up 2%, and soda prices are 25% higher, because of rising costs for ingredients and shipping, Wells Fargo said.

  • Southwest Airlines
    increased the number of nonstop flights leaving from Philadelphia and Kansas City, Mo., from Feb. 9-14 for those seeing to watch the game in person at State Farm Stadium in Glendale, Ariz. Game tickets average $9,825 on the secondary market, according to TicketIQ, MarketWatch reported.

What’s Next: The Eagles are currently two-point favorites over the Chiefs, according to DraftKings Sportsbook. The cost of a 30-second Super Bowl ad on television is $7 million this year, according to Front Office Sports, up from $5.2 million in 2019.

Janet H. Cho


Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.

Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.

Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and at the end of the challenge the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.

Are you ready to compete? Join the challenge and pick your stocks here.


—Newsletter edited by Liz Moyer, Patrick O’Donnell, Callum Keown


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