The TSP stock funds prices recovered lost ground in the second week of the new year. Only the C-fund was able to lift into positive territory for the year. The C-fund was helped by the reawakening of the large tech companies that carry more weight in the S&P 500 index. Microsoft carries the most percentage of S&P 500's of any other company that makes up the index. This week Microsoft gained 5.63% and the tech sector as a whole was up 4.41% for the week clearly outperforming the other sectors.
This reminds us that we can be at the mercy of these companies when holding the C-fund. The broader market is mixed and not climbing as a whole. Buyers are not buying into stocks evenly and are choosing these larger companies as they grow nervous about the direction of the new year. We are entering earnings season so keep an eye on these earnings reports from companies such as Microsoft, Apple, and Amazon, especially if you are holding the C-fund.
Economic data did not make for smooth sailing this week. The December Consumer Price Index (CPI) came in higher than expected and showed an unexpected acceleration in inflation. This muddies the waters for investors buying into rate cuts in the spring by the Federal Open Markets Committee (FOMC). The probability of the Fed cutting rates in their March meeting sits at around 75%. A drop in these expectations could stir up stocks that had already priced in the rate cut.
So far 11 non-premium TSP Talk participants have been able to outmaneuver the C-fund. With the other TSP stock funds (S and I) in negative territory for the year, this is an impressive feat. The premium standings have an even larger gap between the C-fund and the top.
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The TSP is closed tomorrow, Monday 15th for Martin Luther King Jr. Day. Transactions that would have been processed Monday night (January 15) will be processed Tuesday night (January 16) at Tuesday's closing share prices.
Here are the weekly, monthly, and annual TSP fund returns for the week ending January 12:
The C-fund did produce a new high on Friday, passing its previous high from December 28th by 0.06%. In the previous week, the SPY chart rested at its 20-day EMA and we wondered if this short-term moving average could hold this large cap ETF. Well, it did. The SPY price rose off the 20-day EMA with ease on Monday and set up the C-fund for a positive week. The C-fund led the TSP funds with a gain of 1.87% for the week.
The S-fund was up this week as well but has been dragging in comparison without the large cap companies we talked about above. The S-fund was up 0.85% for the week but the index does sit at the bottom of a bear flag. It too is subject the support capabilities of its 20-day EMA, which it has moved across multiple times already this year.
The I-fund outperformed the S-fund this week thanks to its 0.4% return on Friday while the S-fund index was down for the day. The ETF EFA filled an op back from the end of December into January. Buyers must now be willing to buy the index above the highs that were followed by a sharp pull-back two weeks ago. The I-fund gained 1.08% for the week.
Bonds turned around their momentum this week alongside stocks. The bond ETF BND (F-fund) is still below the support it fell through at the beginning of the year, but a 0.91% return this week has erased its losses down to 0.20% for 2024. Bonds seemed unaffected by this week's stronger CPI numbers, making us question our understanding of the bonds and their place in the market.
Good luck and thanks for reading! We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at TSP Talk - Market Commentary. If you need some help deciding what to do with your account, perhaps one of our premium services can help.
Thomas Crowley
(TommyIV)
www.tsptalk.com
Weekly Wrap-Ups Archive
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The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.
