The Big Picture
Last Updated: 16-Jan-26 14:51 ET | Archive
2026 starts with a healthier-looking bull market
Briefing.com Summary:
*Signs of a healthier, more durable bull market have emerged to begin the year.
*Stock market leadership reflects a pro-growth outlook.
*Relative weakness among the mega-cap stocks is a matter of rotation, not deterioration, as earnings and economic fundamentals remain intact.
There is an adage in the stock market that "as goes January, so goes the year." Well, so far, so good.
We are a little more than halfway through the month, but if the latter half of January goes the way the first half of January has gone, then this market should be filled with good vibes about the year.
An Uplifting Tale
The stock market has done exactly what pundits have been pining for it to do: broaden out. It has also done something pundits worried wouldn't be possible: rising without the support of the mega-cap stocks and information technology sector.
It has been both a peculiar turn of events and a welcome turn of events. There is a belief that a bull market is built to last when it is underpinned by broad-based buying interest as opposed to narrow leadership from a select group of stocks and a few influential sectors.
The tables below tell an uplifting tale featuring small-cap leadership, cyclical strength, a value orientation, and some speculative fever that is normal in a bull market. The outliers in the story, but central to the overall market narrative, are the mega-cap stocks. That cohort has been relatively weak to begin the year.
| Market | 2026 Price Return |
|---|---|
| Russell 2000 | 8.1% |
| S&P 400 | 6.0% |
| Dow Jones Industrial Average | 5.9% |
| S&P 500 | 1.5% |
| Nasdaq Composite | 1.3% |
| S&P 500 Sector | 2026 Price Return |
|---|---|
| Industrials | 7.6% |
| Materials | 7.0% |
| Energy | 6.7% |
| Consumer Staples | 5.3% |
| Real Estate | 4.8% |
| Consumer Discretionary | 2.5% |
| Utilities | 1.5% |
| Health Care | 0.9% |
| Communication Services | 0.5% |
| Information Technology | -0.3% |
| Financials | -0.4% |
| ETFs | 2026 Price Return |
|---|---|
| iShares Micro-Cap ETF | 8.9% |
| Invesco S&P 500 High Beta ETF | 5.2% |
| Invesco S&P 500 Equal Weight ETF | 4.0% |
| iShares S&P 500 Value ETF | 2.6% |
| Vanguard Mega-Cap Growth ETF | -0.9% |
An Objective Bias
A synopsis that resonates about the market action is that it reflects a pro-growth outlook among market participants. We can see why, with Q3 productivity surging 4.9%, some GDP models calling for 5.0%+ growth for Q4, weekly initial jobless claims tracking below 200,000, and a projected large tax refund cycle on the way.
What may have caught some market watchers by surprise is that this pro-growth orientation has coincided with a rising tide of geopolitical angst that has included the U.S. incursion into Venezuela to capture Nicolas Maduro, violent anti-government protests in Iran, and President Trump making waves about taking control of Greenland.
Those developments have made for sensational headlines and hand-wringing among politicians, but key to the stock market is that none of them have translated into any material economic harm, which is also to say that they have not disrupted the earnings growth outlook in any meaningful way.
That may sound heartless, yet the stock market operates with an objective bias.
Briefing.com Analyst Insight
The rebalancing activity at the end of 2025 has continued in 2026, as expected. That doesn't mean it is over.
There is a lot of time left in the year, and anything can happen. What is happening now, though, isn't a speculative fever dream. Rebalancing activity has been the defining characteristic of the stock market to begin the year and an overdue happening that has been facilitated by a strong economy, disinflation, robust earnings growth, and well-behaved interest rates.
As those things go, so goes the market.
