Mr. Brightside

“Open up my eager eyes

‘Cause I’m Mr. Brightside”

–Mr. Brightside, The Killers, 2003 

I keep hearing all of this talk about stock market turbulence and unrest to start the New Year.  And while fear and jitters certainly make for more interesting financial news flow, I’m sorry folks, I’m just not seeing it that way.  I’m a financial asset Mr. Brightside, as I see a market that is arguably off to its healthiest start in years.

Coming out of my cage.  Has the headline benchmark S&P 500 had a rousing start to 2026?  Not really.  It is only higher by +1.5% year to date and was lower for the year as recently as last week.  But it’s hardly a disaster either.  I mean, if currently clocking at a +12% annualized rate including touching fresh new all time highs through the first six weeks of the year is considered a tough market, I’ll take that kind of turbulence all day long.  Sign me up.

So where is all of the volatility coming from?  Why the tech sector and friends of course, as the information technology, communications services (Alphabet (Google) and Meta (Facebook), and consumer discretionary (Amazon and Tesla) sectors are lower for the year so far by, wait for it, -1.85%, -0.32%, and -3.39%, respectively.  ***gasp!*** pearl clutch.  Where is the Fed with emergency half point rate cuts?  How will investors in these sectors survive after posting gains of +153%, +156%, and +77%, respectively, in the three plus years prior since the October 2022 lows?  Perhaps here the GoFundMe call to action should be made to help those investors suddenly in need.  Gimme a break.

Here’s the thing; this is already the worst part of the supposedly harrowing market story for the year to date so far, and it’s barely negative if at all.  And the story only gets decidedly better from here.

I’ve been doing just fine. Remember how financial pundits were wringing their hands for years about the perils of the extreme concentration of stock market returns where a select handful of tech and tech adjacent stocks were responsible for driving the market higher while the rest were left languishing on the sidelines?  Well, the tide has definitively turned on this story so far in 2026.  And for those that might proclaim that what is about to follow is nothing more than a fleeting shift at the start of the year that will just as quickly flip back, the reality is that these trends have been true dating back to before Halloween of last year.

Let’s start by rolling down the size spectrum within the U.S. stock market.  Consider U.S. mid-caps and small caps that are higher by +8.37% and +9.60%, respectively.  Even the headline benchmark S&P 500 itself is having a strong start to the year when considering the index on an equal weighted instead of market cap basis with a +6.15% this year so far.

Let’s keep going by breaking the market out across the remaining eight sectors that are not directly tech related (although I would contend that many companies in these sectors will ultimately be the primary beneficiaries of AI, but this is a rant for another article on another day).  In a word, fabulous.  Outside of utilities, all of the other remaining eight stock market sectors are higher for 2026.  This includes Energy (+23%), Materials (+17%), Industrials (+13%), and Consumer Staples (+14%), all of which are up by double-digits in the first six weeks of the year.

One more.  Remember the resurgent performance of developed international and emerging market stocks last year, both of which posting gains north of +30%?  Well, both non-U.S. markets are continuing the trend into 2026, which developed international higher by +9% and emerging stocks by +13%.

What about that market concentration point made above?  After all, only 29% of stocks in the S&P 500 outperformed the index during the period from 2023 to 2025, which is significantly below the long-term historical average of 49% (go figure, roughly one half of stocks in the S&P 500 outperform the index in a typical year on average – sounds about right).  Where exactly are we so far in 2026?  We’re seeing a massive broadening with more than 62% of stocks within the index now outperforming the S&P 500, which is healthy for continued broader market performance as we continue through the year ahead.

Open up my eager eyes.  Amid all of the consternation about the supposed currently challenged stock market state, I would contend that this is arguably the best start to a calendar year for financial markets in quite some time.  Not only are the gains broad, but they are fundamentally healthy and supported by attractive valuations in many cases.  Will there be inevitable pockets of sustained downside turbulence as we continue through 2026?  Almost certainly absolutely, but such short-term bouts of volatility and downside are part of a normal functioning market – it goes with the territory.  But the good news is that financial markets are offering an attractive bright side that may be getting overlooked amid the noise.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Investment advice offered through Great Valley Advisor Group (GVA), a Registered Investment Advisor. I am solely an investment advisor representative of Great Valley Advisor Group, and not affiliated with LPL Financial. Any opinions or views expressed by me are not those of LPL Financial. This is not intended to be used as tax or legal advice. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Please consult a tax or legal professional for specific information and advice.

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Eric Parnell, CFA Chief Market Strategist

Eric Parnell is the Chief Market Strategist for Great Valley Advisor Group. Eric applies his expertise in finance and economics to manage multi-asset portfolios, mitigate risk, deliver advice that promotes informed decision-making, and facilitate investors achieving their short-and long-term investment goals. He leads the GVA Asset Management platform overseeing the management of asset allocation models for GVA advisors and their end clients.

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