Market Monitor January 29th

Highlights

U.S. stock markets closed lower. The Dow Jones lost 0.3%, while the Nasdaq fell 0.5%. The Nasdaq's losses briefly exceeded 1% after the Federal Reserve announced its decision to keep interest rates unchanged. However, the Fed removed references to inflation progress and labor market cooling from its statement. This led to a rise in the 10-year Treasury yield, which climbed 4 basis points to 4.59%.

Fed Chair Jerome Powell later clarified that the removed statements did not carry a hidden message. This helped stocks recover some losses, and the 10-year yield fell back to 4.55%, the level it was before the rate decision.

Nvidia Drops on China Export Concerns

Nvidia (NVDA) fell 5%, reversing a strong recovery from Tuesday. The drop may be linked to reports that the Trump administration is considering stricter restrictions on chip exports to China. Analysts had already anticipated such a move.

Starbucks Jumps on Turnaround Plans

Starbucks (SBUX) surged over 8% to $108.58 after reporting solid quarterly earnings and announcing major leadership changes. The coffee chain outlined a strategic plan aimed at reversing a decline in customer traffic.

Despite a 4% drop in same-store sales, the company remains focused on its "Back to Starbucks" turnaround strategy. CEO Brian Niccol, who joined from Chipotle, emphasized that Starbucks is taking active steps to improve performance.

Market experts reacted positively. Analyst Chris O'Cull (Stifel) called the progress "encouraging" and expects Starbucks to return to sales growth by Q2. He maintains a buy rating with a $114 price target, implying a 5% upside.

Even Jim Cramer endorsed the stock, urging investors to "Buy Starbucks. Period."

Major U.S. Indices Performance

S&P 500 (SPY): -0.45% to 601.81

Despite the daily loss, it remains up 5.39% in the past three months and 21.74% over the past year.

Nasdaq 100 (QQQ): -0.19% to 520.83

Showed some resilience compared to other indices but remains in a short-term downtrend (-2.01% in the past week). However, its 3-month return is still positive at 6.85%.

Russell 2000 (IWM): -0.23% to 226.23

The small-cap index continues to underperform relative to large caps, but it is still up 3.31% over three months and 16.37% over the past year.

Sector Performance – Defensive Sectors Outperform

The sector performance shows a clear defensive rotation, with Financials, Health Care, and Consumer Staples leading, while Energy, Industrials, and Information Technology were among the worst performers.

Worst Performers (1 Week):

• Energy (biggest loser)
• Industrials
• Information Technology
• Utilities

Top Performers (1 Week):

• Financials (best performer)
• Health Care
• Consumer Staples

For the 1-month period, Information Technology is among the weaker sectors, while Financials and Consumer Discretionary performed better. Real Estate and Utilities remain the weakest sectors over this timeframe.

All info available on our Sector Performance page

Market Breadth – More Declining Stocks Than Advancing Ones

The breadth indicators suggest that the market is experiencing short-term weakness, as more stocks declined than advanced: Only 36.4% of stocks advanced, while 60% declined.

More stocks fell over 4% (2.1%) than gained over 4% (2.7%), confirming the bearish tilt.

Moving Average Trends:

• 66% of stocks remain above their 20-day moving average, a drop from previous days.
• Longer-term trends still look solid: 53.4% of stocks are above their 100-day MA, and 57.4% are above their 200-day MA.

All info available on our Market Monitor page

Conclusion

The market continues to show long-term strength, but short-term selling pressure is increasing, with a clear shift toward defensive sectors like Financials and Health Care. Meanwhile, high-growth sectors like Technology and Industrials struggled, contributing to the Nasdaq’s weakness.