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Move Over, Tech

Mike Dickson, Ph.D.
Mike Dickson, Ph.D.

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Stock market returns are broadening out

Technology stocks’ stranglehold on U.S. markets appears to be easing—a welcome development for stockpickers and diversified investors.

Soaring shares of AI and other tech companies have fueled strong stock gains in recent years, while other sectors have languished. But recently, some of those laggards have kicked into gear while high-flying tech stocks take a breather.

For example, the S&P 500 Equal Weight index is off to its best relative start to a calendar year since 1992¹—outpacing the more commonly known S&P 500 index by 4.2%², as seen in the chart. Unlike the market-cap-weighted S&P 500, which is driven primarily by its largest companies, the S&P 500 Equal Weight index assigns equal weight to all 500 stocks.

S&P Equal Weight Index vs. S&P 500 Index
Year-to-Date Excess Returns Through February 6

Bloomberg, calculations by Horizon, data as of 02/06/2026

Bottom line: Stock market returns are expanding from a “tech-only” party to include sectors such as materials, consumer staples, and energy stocks – all of which are up in 2026.

We see this as a very healthy sign for market strength, which we expect to continue due to factors such as:

  • Earnings: Corporate profit growth is broadening out, helping to support more segments of the stock market.
  • Economy: Economic growth has been booming, with real gross domestic product increasing at an annual rate of 4.4% in the third quarter of 2025. Currently, the Atlanta Fed’s GDPNow model projects 4.2% growth in gross domestic product (GDP) for the fourth quarter of 2025.
  • Policy: Fiscal stimulus, such as federal tax cuts, should support spending and growth, while monetary policy is becoming less of a driver of overall growth.

Going forward, continued improvements in market breadth should reward diversified portfolios with exposure to the S&P 500’s many sectors and industries. Additionally, active managers and stockpickers looking beyond the major indices will have more opportunities to identify value and capture returns.

All of that likely spells good news for goals-based investors who remain well-diversified and flexible in the coming months.


¹ YTD return through February 6 for each year listed
² YTD return through 02/06/2026
S&P 500 is a stock market index tracking the stock performance of 500 leading companies listed on stock exchanges in the United States. The S&P 500® Equal Weight Index (EWI) is the equal-weight version of the widely-used S&P 500. The index includes the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 EWI is allocated a fixed weight – or 0.2% of the index total at each quarterly rebalance. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. It is not possible to invest directly in an index. Information obtained from third party sources is believed reliable but has not been vetted by the firm or its personnel.
This commentary is written by Horizon’s asset management team. Past performance is not indicative of future results. Nothing contained herein should be construed as an offer to sell or the solicitation of an offer to buy any security. This report does not attempt to examine all the facts and circumstances that may be relevant to any company, industry, or security mentioned herein. We are not soliciting any action based on this document. It is for the general information of clients of Horizon Investments, LLC (“Horizon”). This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any analysis, advice, or recommendation in this document, clients should consider whether the security in question is suitable for their particular circumstances and, if necessary, seek professional advice. Investors may realize losses on any investments. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. All investing involves the risk of loss.
The investments recommended by Horizon are not guaranteed. There can be economic times when all investments are unfavorable and depreciate in value. Clients may lose money. This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. The opinions expressed herein are our opinions as of the date of this document. These opinions may not be reflected in all of our strategies. We do not intend to and will not endeavor to update the information discussed in this document. No part of this document may be (i) copied, photocopied, or duplicated in any form by any means or (ii) redistributed without Horizon’s prior written consent. Forward-looking statements cannot be guaranteed. Other disclosure information is available at www.horizoninvestments.com.
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©2026 Horizon Investments, LLC.
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