The S&P 500 index (SPX) closed higher for the first 5 days of 2025, at +0.62%. Historically, this is bullish for the full month of January.
From Bank of America (BofA) Global Research, in a note dated 1/6/25:
Since 1928, “When the first five sessions of January are up, the month of January is up with 73% of time with an average gain of 2.2%”.
Disclosures: Outside Research Disclosures Page – Blue Chip Daily Trend Report
With that being said, I would like to add a few key points:
- Seasonality and past performance data are never a future guarantee.
- Each market environment is unique.
- There are three key factors that investors should monitor in January:
1. Bond yields, primarily the 10-year U.S. Treasury yield (TNX). Currently trading near 4.68%, near 9-month highs. If (TNX) breaks out closer to 5.00%, that could create near-term headwinds for the S&P 500 index.
Conversely, a marked pullback in a Treasury yields should be a positive tailwind for equities.
The December payrolls report tomorrow at 8:30 AM should provide key direction for stock and bond markets.
2. The U.S. Dollar Index (USD/DXY), currently near 109.15 and testing 25-month highs. If USD breaks out over 110, that could create higher SPX volatility and near-term headwinds.
Conversely, a marked pullback in the Dollar could be a positive tailwind for equities.
3. Quarterly corporate earnings reports– starting January 15, with J.P. Morgan Chase (JPM). Major tech earnings start on January 16, with Taiwan Semiconductor (TSM). We are looking for strong earnings from these two leaders, but that remains to be seen.
