In our “2023 Stock Market Outlook: Near-Term Turbulence, but Clearer Skies Ahead,” we noted that the US equity market was trading deep within undervalued territory. In fact, dating back to 2010, the market had only traded at that much of a discount less than 5% of the time. As the pressures of tax-loss selling in December faded, and seasonal and other technical factors played out in January, the stock market has surged higher.
In January 2023, the Morningstar US Market Index rose 6.84%. Growth stocks outperformed the broader market as the Morningstar US Growth Index leapt 10.93%, followed by our US Core Index at 5.79%, and the Morningstar US Value Index lagging the market at 4.29%. By market capitalization, small-cap stocks performed the best, rising 10.55%, followed by mid-cap at 8.40%, then large-cap at 6.06%.