February 1, 2025 Market Update

Over the past week, the U.S. stock market showed mixed performance, with the tech-heavy Nasdaq and the S&P 500 Index declining by 1.64% and 1.00%, respectively.  Small-cap stocks, represented by the Russell 2000 also dropped 0.87%.  The Dow showed some resilience, posting a small gain of 0.27%.  That being said, all major U.S. equity indexes posted significant gains during the month of January as the Dow led the pack with a 4.70% gain.

Notwithstanding the turbulence earlier during the week, Treasury markets remained largely unchanged, with the 10-year Treasury declining modestly 6 bps.  The overall U.S. bond market, as measured by the Vanguard Total Bond Market ETF (BND) rose by 0.42% this week and was up 0.60% for the month of January.

Two major developments competed for investors’ attention this past week.

The first was China-based DeepSeek’s announcement that it had trained a high-performing AI model which rivals OpenAI’s ChatGPT without relying on the most advanced chips from Nvidia and other U.S. companies.  Tech stocks sold off sharply following the news.  While some recovered later in the week, the gains weren’t enough to offset earlier losses.  Meanwhile, Microsoft and OpenAI are investigating whether DeepSeek used data from OpenAI without proper authorization when building its R1 model.

The second was the Federal Open Market Committee’s (FOMC) latest policy meeting, which concluded Wednesday.  As expected, the Fed kept the federal funds rate steady at 4.25% to 4.50%.  In his comments following the meeting, Chairman Powell signaled that the Fed was going to take a cautious approach to future rate cuts, “We do not need to be in a hurry to adjust our policy stance,” he said.   

On another note, The Brinsmere Funds Year End Investor Report has been published and can be found here on The Brinsmere Funds website.  Be sure to reach out if you have any questions or would like to learn more.

That’s all for now.  Have a great weekend and invest wisely, my friends.