5 Best-Performing ETFs of January

Wall Street has been upbeat in January. The S&P 500 has advanced 3.5% so far this month, the Dow Jones has gained 5.9% and the Nasdaq Composite has added 2.1%. The tech-heavy Nasdaq has been hit hard by the DeepSeek rout at the end of the month.

Below, we highlight the key events that shaped the markets and economic landscape in January.

DeepSeek, a Chinese startup developing AI models, grabbed headlines with the release of its new R1 model in late January. According to Yahoo Finance, the company revealed that training the R1 model cost just $5.6 million, significantly less compared to the $100 million required to train OpenAI’s GPT-4 model.

This raises important questions about AI investment and the potential rise of more cost-efficient artificial intelligence agents, which could disrupt the current market dynamics (read: Will 2025 See Slowing AI Investments in Big Tech? ETFs in Focus).

A self-imposed Feb. 1 deadline set by Donald Trump for implementing a new round of tariffs on Canada, Mexico and China is knocking at the door. As the deadline nears, economic analysts and world leaders scramble to prepare for potential impacts amid growing uncertainty. On Thursday afternoon, Trump reiterated his commitment to imposing a 25% tariff on imports from Mexico and Canada.

In the January meeting, the Federal Reserve has opted to hold interest rates steady at 4.25% to 4.5%, signaling a cautious stance on further reductions. This decision reflects lingering inflation concerns and uncertainty surrounding President Donald Trump’s economic policies, particularly on trade and immigration.

With no immediate plans for additional rate cuts, the Fed appears to be adopting a wait-and-see approach, closely monitoring inflation trends and awaiting further specification on how Trump’s policies will shape the economy.

The Bank of Japan (BOJ) increased its policy rate by 25 basis points to 0.5% on Jan. 24, 2025, marking the highest level since 2008. This decision aligns with a CNBC survey conducted from Jan. 15-20, which revealed that most economists anticipated the hike as part of the central bank’s efforts to normalize monetary policy. The yen was on track for its best monthly start to the year since 2018 on Friday, due to a hawkish BoJ (read: Bank of Japan Raises Policy Rate to 0.5%: ETFs in Focus).

The latest quarterly results from America’s major banks acted as a crucial thing as investors can assess the current economic condition from these very releases. The financial sector, which accounts for around one-fifth of the S&P 500 Index, had an upbeat Q4. All six big U.S. banks were able to beat overall this reporting season (read: ETFs to Play Upbeat Bank Earnings).

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