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 shares MSFT 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.
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% on 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 Donald 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.”
