Stock futures are slightly down as the S&P 500 heads for its best January since 2019

Traders work on the floor of the New York Stock Exchange (NYSE) during morning trade on January 26, 2023 in New York City.

Michael M Santiago | Getty Images

Stock futures edged lower on Tuesday as the S&P 500 looks to complete its best January since 2019.

Futures linked to the S&P 500 fell 0.27%, while futures linked to the Dow Jones Industrial Average fell 0.26%, or 86 points. Nasdaq 100 futures fell 0.48%.

Overnight moves followed a pause in what was a stellar January for equities. During regular trading, the Dow fell 260.99 points, or 0.77%, while the S&P and Nasdaq Composite fell 1.30% and 1.96%, respectively.

Stocks have rebounded to start the year after a brutal 2022 — and the worst year for stocks since 2008. At Monday’s close, the S&P and Dow are up 4.64% and 1.72%, respectively, in January and are steering on their third positive month to four. The Nasdaq Composite is up 8.86% for the month, its best monthly performance since July.

“The reason I was bullish on stocks at the start of the year is because the revisions are mostly behind us, people have gotten too negative…” Trivariate Research’s Adam Parker told Closing Bell: Overtime on Monday ‘ by CNBC. “That’s not the case. We have an eroding and slowing backdrop, not one that’s fading.”

A solid January could bode well for the market and possibly herald a continued uptrend in the following months. Of the five times the S&P gained more than 5% in January after a negative year, the benchmark index rose 30% on average for the year, Carson Group’s Ryan Detrick said in a tweet.

However, a busy earnings week with reports from McDonald’s, Meta Platforms and Amazon could jeopardize this recent rally. Investors are watching comments closely on how some of the largest companies are faring amid high inflation and fears of slowing consumer spending.

Attention is also turning to the latest interest rate decision due at the Federal Reserve’s final monetary policy meeting on Tuesday. Traders are broadly expecting a 25 basis point hike but will be watching comments for clues as to how far the Fed intends to hike further or when it plans to cut rates.

Companies reporting earnings on Tuesday include McDonald’s, Caterpillar, General Motors, Pfizer and Advanced Micro Devices.