Stock funds’ performance in January—including a 3% gain for large-cap growth stocks but a flat performance for stock funds overall—paled in comparison with the year-earlier January rally.

So why is the market mood happier?

Hope. A year ago, despite the January rally, investors were still licking their wounds from a brutal full-year 2022, and there was little hope for market gains as the Federal Reserve continued raising interest rates to battle inflation.

This year, despite the modest January run, according to Refinitiv Lipper data, there is hope that the Fed’s heavy lifting has ended and the market’s recent ascent to record highs can be built upon.

In particular, the market’s late-2023 burst on the back of large tech stocks—which powered stock funds to an average 21.1% gain for 2023 overall—has made investors feel more optimistic as the new year has started.

Some analysts are tapping the brakes, however, saying investors could be overly positive about the Fed and the outlook for rate cuts (a turnaround from last year’s increases). “The market has [already] priced in aggressive Fed rate cuts in 2024, marking a sharp reversal of the Fed’s tightening campaign that brought the fed-funds rate to 5.5% last year,” says John Lynch, chief investment officer for Comerica Wealth Management. He looks for three cuts this year beginning in June but says the market had been behaving as though there would be five or six.

The 3% gain in large-cap growth funds, dominated by tech stocks with earnings potential, added to—focusing on stocks that are powered by corporate-earnings potential, in particular the tech giants—last year’s 40.5% full-year rally.

International-stock funds fell an average 0.8% in January, after having risen 16.3% for all of 2023.

Bond funds were flat. Those focused on investment-grade debt, the most common type of fixed-income fund, slipped 0.02% in January, after having risen 5.8% for all of 2023.

Will stocks be super?

One of the market’s most quirky indicators, the Super Bowl Predictor, is telling us that a win by the San Francisco 49ers will mean stocks will rise in 2024, while a Kansas City Chiefs win will mean a yearly loss.

The Predictor, which of course has no scientific basis, says that a win by an original National Football League team—from the days when there was an NFL and an American Football League, before the 1966 merger pact—means the market will be up for the year. A win by a descendant of the AFL, like the Chiefs, sends the market down.

The Predictor, popularized by the late Wall Street analyst Robert Stovall, has been right after 41 of the 57 Super Bowls, a 72% success rate.

It didn’t work last year: The bearish Chiefs won it all but the stock market lighted up the scoreboard anyway.