By Martin Baccardax

With the U.S. digging out from Winter Storm Fern, and counting the cost of an arctic blast that could bring record cold readings as far south as the Florida Keys, investors are also taking the temperature of perhaps the most important stretch of the year for the stock market.

Labeled the "January Barometer" by famed academic Yale Hirsch, creator of the Stock Trader's Almanac, the idea of extrapolating first- month returns over the calendar year has proven to be a winner. "As goes January, so goes the year," is a pithy version of the concept.

Adam Turnquist, chief technical strategist at LPL Financial, notes data showing that since 1950, the S&P 500 has generated an average return of nearly 17% in years when the benchmark ends January in positive territory. Red for the month, meanwhile, has portended declines of around 1.7% for the whole of the year.

"With both the weather and markets in flux, investors are watching closely to see if January delivers clearer skies or more turbulence ahead for stocks," he said.

The S&P 5oo is currently sitting on a solid January gain of 1.9%, with just three trading days remaining. It appears to be on pace to end the Tuesday session at a record high.

But big tests remain: The Federal Reserve will unveil its latest interest- rate decision on Wednesday. While the central bank is expected to keep its benchmark lending rate unchanged at between 3.5% and 3.75%, analysts and investors will be looking for clues as to the central bank's next policy moves.

Four of the so-called Magnificent Seven tech companies are also slated to provide December quarter profit updates over the coming days. Tesla, Microsoft, and Meta Platforms are scheduled to report after the close of trading on Wednesday. Apple will publish its earnings for its fiscal first quarter on Thursday.

The cohort represents around $10 trillion in market value, or around 16% of the entire S&P 500, but only Microsoft and Meta are trading in positive territory for the year.

Other uncomfortable facts surrounding the current market advance are the soaring rally seen in gold and other precious metals and the continuing slump for the U.S. dollar.

The greenback hit a fresh four-year low on foreign-exchange markets in early Tuesday trading as investors speculated that the U.S. and Japan may be working together to support the yen. Gold topped the $5,100 an ounce mark on Monday.

"Gold's strength alongside strong equities suggests investors are increasingly focused on long-term purchasing-power protection rather than a risk off trade," said David Miller, CIO at Catalyst Funds. "Persistent inflation, record fiscal deficits, and geopolitical uncertainty are pushing investors to own real assets as insurance."

Domestically, it is also notable that while the economy continues to outperform, and the labor market remains broadly resilient to layoffs, consumers aren't feeling terribly buoyant.

The Conference Board's benchmark reading of consumer confidence slumped to a 12-year low this month, with a greater number of respondents expecting conditions to worsen over the next six months.

"Americans are frustrated with rising prices for groceries and electricity, and they are fearful of the hiring recession that's underway right now," said Heather Long, chief economist at Navy Federal Credit Union. "The K-shaped economy is great for the top 20%, but many middle-class and moderate-income Americans are barely keeping up."

What is likely to matter more for stock performance, however, is growth in corporate earnings. Right now, LSEG forecasts suggest collective fourth-quarter profits for the S&P 500 will rise 9.2% from last year to around $602 billion.

Those gains will quicken in the first quarter of this year, to around 12.4%, LSEG predicts. Wall Street has penciled in a full-year growth rate of 15.2%.

Turnquist at LPL Financial sees optimistic signals from the January gains, but notes that past years' patterns don't tell the entire story.

"It is important to remember that seasonal trends reflect historical tendencies, not guarantees of future outcomes," he said. "These patterns do not account for underlying fundamentals such as earnings results, shifts in monetary or fiscal policy expectations, evolving economic conditions, or geopolitical developments."

We'll get a bit of all of those in the next few days.

Write to Martin Baccardax at martin.baccardax@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 27, 2026 14:18 ET (19:18 GMT)

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