These are the top performing stocks and ETFs in a historically bad January

Published Fri, Jan 28 202212:36 PM EST

It has been a historically bad start to the year on Wall Street, but a few bright spots have managed to peak through. The S & P 500 is on track for one of its worst Januarys on record, while the Nasdaq Composite has fallen into correction territory as high inflation readings and an increasingly hawkish Federal Reserve have roiled the risk markets. "What we've been telling our advisors is stocks are really expensive by the valuation metrics. You can justify that with low interest rates and low inflation, but inflation is high and rates are moving higher. ... It's a really tough environment to invest," said Gene Goldman, chief investment officer at Cetera Investment Management. Goldman added that materials and energy were among his favorite sectors for the current market environment. Energy is the best-performing sector in January, thanks to oil prices that have climbed above $80 per barrel. In fact, the top 10 S & P 500 stocks for the month through Thursday's close are oil and gas names. Halliburton and Schlumberger have been the best two performers, rising about 35% and 30%, respectively. The rally for energy stocks comes after years of underperformance for the group, which was hurt last decade by the aftermath of the shale boom and increased investor focus on the environment and green energy. However, the high economic growth rates coming out of the pandemic shutdowns combined with management teams reluctant to expand drilling has many Wall Street forecasters predicting that oil will hit $100 per barrel again. There have been other bright spots in the market, though they are a more eclectic group of stocks. The list below shows the best-performing S & P 500 stocks outside of the energy sector. The top stock on the list is Activision-Blizzard , a video game stock that soared after agreeing to a takeover deal from Microsoft . However, the stock is still selling below the deal price of $95 per share, as investors wait to see if regulators will challenge the acquisition. Financials have had some strong showings as well, with Wells Fargo jumping 12% and M & T Bank gaining nearly 10%. Banks are wrapping up a fairly mixed earnings season, but rising interest rates are generally seen as positive for banks. Among exchange-traded funds, energy is also the main theme of success in January, according to Morningstar. The VanEck Oil Services ETF , for example, has gained 22% this month. The iShares U.S. Oil & Equipment Services ETF and the Energy Select Sector SPDR Fund are also among the top performers of unlevered, long-only equity funds. Similarly, funds that track commodities and commodity futures — including oil, natural gas and cotton — have outperformed as well. Some international stock funds have also done well, particularly in South America. The iShares MSCI Chile ETF and the iShares MSCI Brazil ETF are up 12% and 11% in January, respectively. Both funds have large weights in materials and financials, while the Brazil fund also his a sizeable position in energy stocks, according to Morningstar.

A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, June 9, 2016.

Richard Carson | Reuters

It has been a historically bad start to the year on Wall Street, but a few bright spots have managed to peak through.

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