February 2025 Market Watch

February 5, 2025

Market Health Indicator - Current Score

The Market Health Indicator (MHI) measures market health on a scale of 0 - 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.

Markets kicked off the new year on a positive note with both stocks and bonds delivering broadly positive results.

Following a bumpy ending to 2024, markets bounced back in January, continuing the longer-term trend that’s been in place since late-2022. Despite lingering inflation and tempered Fed expectations, the US economy continued to show strength as GDP growth and the labor market remained relatively healthy.

The blue-chip Dow Jones Industrial Average led the way higher, gaining 4.78%, with the S&P 500 and Nasdaq 100 posting gains of 2.78% and 2.25% respectively. Smaller companies also shared in the good times as market participation improved, with the CRSP US Small Cap Index increasing 3.89%. Value companies outpaced growth companies as a whole for the month, as all but one sector finished in positive territory, though AI competition fears put a damper on large-cap US tech stocks.

Markets overseas were higher as well, with developed international stocks rising 4.43% and emerging markets adding 0.82%. European companies were supported by signs of improving economic data, while India caused a drag on emerging markets amid weaker earnings and a stronger dollar. Tariff uncertainties also kept a lid on emerging countries like China.

After three straight rate cuts, the Fed pressed pause on rates in its first meeting of the year. Despite climbing higher earlier in the month, the 10-year Treasury yield remained unchanged at 4.58% when all was said and done. This helped provide some stability to bond prices, resulting in a gain of 0.53% for aggregate US bonds. At the moment, investors are pricing in just two rate cuts for 2025, with the first projected in June.

January was a great example of why it’s important to remain diversified when it comes to investing. Market trends can change quickly, and one month’s leaders can become the next month’s laggards. Maintaining a well rounded portfolio can help smooth out the short-term noise and volatility, aligning your investments with your long-term plan.

If at first you don’t succeed, try again three years later, and for $800 million less…

Frontier Airlines, known for its ultra low-cost travel options, made another offer to buy rival Spirit for $2.1 billion.

This is the second time Frontier’s attempted to take over its budget airline rival. In 2022, Spirit accepted a $2.9 billion buyout offer before backing out for a larger offer from JetBlue.

However, the deal between Spirit and JetBlue was blocked over concerns the merger could lead to monopolization (it would have created the fifth-largest airline in the US).

Since the first attempt, Spirit has filed for bankruptcy as bare-bones carriers have struggled to turn a profit.

While Spirit said the new offer is too low, Frontier is hoping a friendlier antitrust department will mean clear skies ahead to get a deal done.

If you can’t beat em, join em…

JCPenney announced it’s joining forces with Sparc Group in attempt to create a new super mall brand - Catalyst Brands.

Unfamiliar with Sparc Group? The company owns a number of other once-bankrupt mall staples including Forever 21, Brooks Brothers, Eddie Bauer, Nautica, and Aeropostale.

The new company will manage 1,800 stores, 60,000 employees, and will have $9 billion in revenue.

Catalyst Brands is hoping by combining the companies together it can result in cost reduction and cross-marketing, as reduced foot traffic has resulted in store closures.

If that news wasn’t enough to revitalize the mall scene, Barnes & Noble said it plans to open 60 stores this year after being on the brink of bankruptcy just six years ago.

Fun Facts

• On its 12th test flight, the Boom XB-1 became the first privately funded plane to break the sound barrier, reaching a top speed of Mach 1.1.

• The first known stock market was the Amsterdam Stock Exchange, established in 1602.

• Cottage cheese sales in the US have surged over 50% in the past five years.

• Fish will seek out shaded areas during sunny days because cold water provides better access to oxygen than warm water.

The information presented is not investment advice - it is for educational purposes only and is not an offer or solicitation for the sale or purchase of any securities or investment advisory services. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser when making investment decisions.