Move Over, Tech

• The S&P 500 Equal Weight index is experiencing its strongest relative performance to start a year since 1992, signaling a move away from tech-dominated returns
• Economic growth remains robust with real GDP increasing 4.4% annually in Q3 2025, and the Atlanta Fed projecting 4.2% growth for Q4 2025
• Broadening corporate profit growth and fiscal stimulus like federal tax cuts are expected to support diversified portfolios and create opportunities for active managers and stockpickers

Market Summary: Broadening Stock Returns Beyond Technology

Key Development:

U.S. stock market returns are expanding beyond technology stocks, marking a significant shift in market leadership. The S&P 500 Equal Weight Index is experiencing its best relative start to a calendar year since 1992, outperforming the traditional market-cap-weighted S&P 500 by 4.2% year-to-date through February 6, 2026.

Market Breadth:

Returns are broadening across multiple sectors previously overshadowed by tech, including materials, consumer staples, and energy—all posting positive gains in 2026. This represents a transition from a "tech-only" rally to more diversified market participation.

Supporting Factors:

• Corporate Earnings: Profit growth is expanding across more market segments beyond large-cap technology
• Economic Growth: Real GDP increased 4.4% annually in Q3 2025, with the Atlanta Fed's GDPNow model projecting 4.2% growth for Q4 2025
• Policy Environment: Fiscal stimulus including federal tax cuts expected to support spending, while monetary policy becomes less influential

Market Implications:

The improved market breadth signals healthier market conditions and creates opportunities for:

• Diversified portfolio strategies with exposure across S&P 500 sectors
• Active managers and stockpickers seeking value beyond major indices
• Goals-based investors maintaining diversified, flexible allocations

Bottom Line:

Analysts view this broadening as a positive development for market strength and sustainability, favoring diversified investors over concentrated positions. The shift rewards equal-weight strategies and active management approaches that can capitalize on opportunities beyond mega-cap technology stocks.