The ‘January barometer’ for stocks comes with a big asterisk this year

Market Overview - January 2026 was marked by significant volatility, with crowded trades experiencing sharp movements, and the dollar briefly hitting a four-year low [1] - Major tech stocks faced declines, with Microsoft down 11%, Apple down 4.6%, and Tesla down 4.3% [2] - Conversely, Meta Platforms and Alphabet saw gains of 8.6% and 8% respectively, indicating a mixed performance in the tech sector [3] Index Performance - The S&P 500 index recorded a 1.4% gain in January, suggesting a positive outlook for the year ahead [4][5] - Small-cap stocks, represented by the Russell 2000 index, outperformed large-cap stocks, gaining 5.3% in January compared to the S&P 500's performance [6] January Barometer - The "January barometer" suggests that a positive January typically correlates with a strong year, with historical data showing an average increase of 16.2% for the S&P 500 when January ends with gains [7] - Despite the positive indicators, January 2026 was described as atypical due to geopolitical tensions and policy uncertainties [8]