economy
January 9, 2026
The broadening trade has been in full swing this week. Will it stick?
Cyclical stocks are off to a strong start in 2026, and some on Wall Street believe that may continue.
TL;DR
- Consumer discretionary and materials sectors led the market in the first full week of the year, with gains over 5% and 4% respectively.
- Tech and utilities were laggards, with tech remaining flat and utilities falling over 1%.
- The S&P 500 reached multiple intraday all-time highs, driven by the upward moves in cyclical sectors.
- Market technicians note rapid factor and sector rotations, with tech showing lackluster performance.
- Investment strategists suggest the trend of cyclical leadership is likely to continue, at least early in the year.
- International stocks, tracked by the iShares MSCI ACWI ex U.S. ETF (ACWX), have also started the year strong, outperforming the S&P 500.
- Some analysts believe a selective approach to tech and AI may be beneficial, focusing on industries that utilize AI, such as financials, health care, and industrials.
- Diversification of AI across borders and regions is expected to increase investor interest.
- While international valuations may be attractive, fundamentals will need to justify them, similar to U.S. Big Tech.
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