S&P 500 notches new record high, top tech stocks to consider in 2026

Key Concepts

• S&P 500, S&P 600, S&P 400: Major stock market indices representing large-cap, small-cap, and mid-cap companies respectively.
• Basis Points: A unit of measurement used in finance to describe percentage points (1 basis point = 0.01%).
• Equal Weight Index: An index where each constituent stock has the same weighting, unlike market-cap weighted indices.
• Intraday Chart: A chart displaying price movements within a single trading day.
• Philly Chip Index (SOX): An index tracking semiconductor companies.
• Capex: Capital Expenditure - funds used by a company to acquire, upgrade, and maintain physical assets.
• ECM: Equity Capital Markets - relating to raising capital through the issuance of equity.
• AI (Artificial Intelligence): The simulation of human intelligence processes by computer systems.
• Copilot: An AI assistant integrated into software applications (e.g., Microsoft Office).
• CPI (Consumer Price Index): A measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services.
• Nominal GDP: Gross Domestic Product measured at current market prices.

Market Performance & Records (January 12th, 2024)

Today’s trading session saw multiple stock market indices reach record highs, despite relatively small gains. The S&P 500 achieved a record high, increasing by 11 points (0.16%). Notably, the S&P 600 (small caps) hit its first record high since November 2024, and the S&P 400 (midcaps) also reached a record. The S&P 500 Equal Weight index also achieved a record, despite a small increase. The Dow Jones Industrial Average also reached a record high. The NASDAQ Composite showed the largest gain, up approximately 0.25%, but did not reach a record. Micro-cap stocks also saw gains. This broad-based performance across different market capitalizations was described as significant.

Sector Performance:

The strongest performing sectors were staples (leading for the first time in a while), industrials, materials, tech, real estate, and utilities. The weakest sectors were financials (down 0.8%), energy, and communication services.

Specific Stock Movements:

• Nvidia: Positive, but not a significant gainer.
• Alphabet: Up 1%.
• Broadcom: Up 2%.
• Philly Chip Index (SOX): Reached a record high.
• AMD & Taiwan Semi: Both up 2%.
• Intel: Down 3%.
• Analog Devices & Qualcomm: Down almost 5% each.
• Microsoft: Down, but the equal-weighted view showed more green.
• UiPath: Up 5%.
• Teladoc: Down 2.5%.
• Walmart: Up 3%.
• Johnson & Johnson (J&J): Up 2.5%.
• Procter & Gamble: Up 1%.
• Boeing: Up 2%.

Trump Administration & Market Reaction

The initial market reaction was negative due to statements from the Trump administration regarding Jerome Powell and potential threats to banks regarding interest rate caps. However, the market quickly reversed course as Powell’s response was perceived as measured and credible, leading investors to believe the threats were unlikely to materialize. Scott Ladner, Verizon’s chief investment officer, noted that the market decided the threats “didn’t have any legs” and that advisors were likely tempering Trump’s approach.

Economic Outlook & Fed Policy (Scott Ladner)

Ladner emphasized that a “boring Fed” is a positive sign for 2026, indicating stable inflation and employment. He believes this environment historically leads to strong market performance. Recent jobs data was described as “not too hot, not too cold,” and expectations for the upcoming CPI report are for a “not very exciting” result. This would allow the Fed to remain inactive, which Ladner views as beneficial. He highlighted the potential for strong nominal GDP growth driven by stimulus from both the private and public sectors (capex, tax refunds, expensing).

Investment Strategy Shift (Scott Ladner)

Ladner suggested a shift in investment strategy, moving away from the AI trade of 2025 towards broader participation in the economy. He anticipates the diffusion of AI capabilities across various sectors, allowing companies beyond the mega-cap tech firms to benefit. He recommends focusing on cyclical and value stocks, or an equal-weight index strategy to avoid overconcentration in growth stocks.

Bank Earnings & Trump’s Credit Card Rate Proposal (Gerard Cassidy)

The upcoming bank earnings reports are expected to show strong results, particularly in capital markets. However, the focus has shifted to President Trump’s proposal to cap credit card interest rates at 10%. Cassidy explained that this proposal is unlikely to be implemented as it would require legislation or regulatory action, similar to the Credit Card Act of 2009. He believes the proposal is a political strategy aimed at addressing cost of living concerns, particularly with midterm elections approaching.

Negative Consequences of Rate Caps: Cassidy argued that capping rates at 10% would negatively impact borrowers by reducing credit availability, as banks would be less willing to lend to higher-risk individuals. He noted that banks with existing credit losses of 5-7% would struggle to profit at a 10% rate, leading to tighter lending standards.

Capital Markets Outlook (Gerard Cassidy)

Cassidy anticipates continued growth in capital markets in 2026, driven by a growing US economy (2-2.5%). He expects strong investment banking pipelines for mergers and acquisitions, a robust debt capital markets, and positive trading revenues. However, he cautioned that year-over-year earnings growth for capital markets players will become more challenging in the second half of 2026 due to tougher comparisons.

Trending Tickers

• Alibaba: Surged due to an antitrust probe into the food delivery industry, raising hopes for improved industry margins.
• Walmart: Gained momentum following a partnership with Google to launch a new shopping experience within Gemini (AI tool) and its upcoming inclusion in the NASDAQ 100.
• Citigroup: Announced plans to cut approximately 1,000 jobs as part of a broader cost-cutting initiative.

Meta’s AI Strategy (Brent Thill)

Meta is making significant investments in AI infrastructure, potentially exceeding $400 billion. While this raises concerns about cost structure, Brent Thill believes Meta is the most hated name in internet right now, presenting a buying opportunity. He highlighted Meta’s unique position to monetize AI across its vast user base and diverse portfolio (apps, infrastructure, security). The company is reportedly cutting jobs in its Reality Labs division while prioritizing AI development.

Key Focus for Earnings Call: Investors should pay close attention to the details of Meta’s AI spending and the expected return on investment.

Microsoft’s AI Position (Brent Thill)

Thill believes Microsoft is best positioned to capture the broadest AI tailwinds due to its extensive platform, including Office applications, Azure cloud services, and security offerings. He emphasized Microsoft’s early leadership in AI, its partnership with OpenAI, and its ability to monetize AI across its entire portfolio. Microsoft has demonstrated strong revenue growth and improved margins despite significant AI investments.

Tuesday’s Economic Calendar

• Earnings: JP Morgan, Bank of New York Mellon, Delta Airlines.
• Economic Data: Consumer Price Index (CPI), New Single-Family Home Sales.
• Event: President Trump’s speech in Detroit.

Synthesis/Conclusion

The market demonstrated resilience despite initial concerns surrounding political rhetoric. Multiple indices reached record highs, indicating broad-based investor confidence. The focus is shifting towards economic data and the potential for a stable interest rate environment. Investment strategies are evolving to encompass a wider range of sectors, with a growing emphasis on cyclical and value stocks. Meta and Microsoft are positioned as key players in the AI revolution, but investors are closely monitoring their spending and expected returns. Upcoming economic data releases and earnings reports will provide further insights into the market’s trajectory.