Stock Market This Week

Stock Market This Week – 01/13/24

Stock Market This Week

Stock Market This Week – 01/13/24

Slow and steady is probably the one phrase that can describe the economy. Despite expectations to the contrary, it continues to grow. Also, the unemployment rate has been 4% or lower for the longest stretch in the past five decades. Job availability is still solid, although lower than in early 2023.

What works for the economy is also a good idea when investing in the stock market. Slow and steady returns add up over time. The long-term average since 1928 has been about 10% before inflation. That’s good. The Rule of 72 shows your money will double every 7.2 years. 

But as any investor knows, returns don’t hit 10% yearly; the market is volatile. For instance, the S&P 500 Index gained ~28.5% in 2021, down 18% in 2022, and soared 24% in 2023. Going back a decade, you can see the returns are not a straight line. However, over time, returns average out to about 10%. But the trick is to buy and stay invested because trying to time the market’s ups and downs is a fool’s errand.

If you did not know the above and are investing without knowledge, it is time to learn about investing. I suggest taking The Simply Investing Course to learn about investing. It is self-paced and reasonably priced. Click here to try theSimply Investing Course* (30-day free trial).

Stock Market Overview

Data from Stock Rover* showed the market picking up this week, led by technology and growth stocks, continuing trends from last year. The Nasdaq Composite led the way. It was followed by the S&P 500 Index, the Dow Jones Industrial Average (DJIA), and the Russell 2000. However, the Russell 2000 had a slightly negative return, meaning small-cap stocks struggled.

Seven of the 11 sectors gained this week. The Technology, Communication Services, and Consumer Defensive sectors were top performers. However, the Basic Materials, Utilities, and Energy sectors were the worst performers.

Oil prices fell this week, ending at ~$73. However, demand remains weak, supply is strong, and the quantity in storage is robust. The VIX dropped ~5.6%+ to 12.7, which is still well below its long-term average. Gold was flat at ~$2,053 per ounce.


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Stock Market Returns This Week
Source: Stock Rover*

After a weak start, markets have recovered. The S&P 500 Index has gained, but the other indexes are all slightly down. The Russell 2000 has performed the worst so far. Three of the 11 sectors have gained. The top performers in 2024 have been Healthcare, Consumer Defensive, and Communication Services. dnWhile Industrials, Consumer Cyclical, and Basic Materials are trailing.

YTD Stock Market Returns
Source: Stock Rover*

The dividend growth investing strategy started the year down. Larger market capitalization stocks are performing better than smaller ones. As a result, the Dividend Kings and Aristocrats are doing well on a relative basis. The table below shows their performance by category.

CategoryYTD Return (%)
Dividend Kings-0.97%
Dividend Aristocrats-0.34%
Dividend Champions-1.51%
Dividend Contenders-4.12%
Dividend Challengers-2.54%
Source: Stock Rover*

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Stock Market Valuation This Week

The S&P 500 Index trades at a price-to-earnings ratio of 25.96X, and the Schiller P/E Ratio is about 32.2X. These multiples are based on trailing twelve months (TTM) earnings.

The long-term means of these two ratios are approximately 16X and 17X, respectively. 

The market is still overvalued despite the recent correction and a bear market and rebound. Earnings multiples of more than 30X are overvalued based on historical data.

Resources

Curated Weekend Reading From Around The Web

Portfolio Management and Investing

Retirement

Financial Independence


Here are my recommendations:

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*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.

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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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