History still favors tech after a rare early-year lift off for the Russell 2000, says Goldman

MW History still favors tech after a rare early-year lift off for the Russell 2000, says Goldman

By Barbara Kollmeyer

Small-cap stocks are off to a breathtaking start for 2026

Small-cap stocks are off to an impressive start for 2026. Goldman offers a look at what's ahead.

While geopolitics have been pecking away at the S&P 500's SPX ability to lift off in early 2026, the Russell 2000 has been on fire.

The index of smaller-cap companies RUT marked its 7th record close of the new year on Wednesday, and its best one-day gain on a point and percentage basis since late November. As Goldman Sachs notes, the Russell 2000 has outperformed the Nasdaq Composite COMP by nearly 3% since the start of this year.

A Goldman Sachs report crunched some numbers to look at what has happened in the past when the Russell has outperformed the Nasdaq-100 index NDX by more than 2% to start the year.

Analysts led by Gail Hafif noted eight other times that this has happened since 1928, and their chart shows which group of stocks are ahead a year after that rare setup:

The end result is that tech stocks seem to come out on top, even when smaller companies get off to a lead. On average, one year later the Nasdaq-100 returned 10.25% versus a 7.11% gain for the Russell.

Big Tech stocks have been stock-market laggards amid an ongoing rotation in the past few months into not just small caps, but cyclicals, value stocks and global equities. Still, tech behemoths are the cheapest they've been in months, and some money managers say it's a fine time to buy.

The Russell 2000 returned nearly 13% last year, versus over 17% for the S&P 500. The Nasdaq 100 returned 21%.

Food for thought on the Russell comes from a widely followed investor The Conservative Income Investor on X:

Doug Kass, the president of Seabreeze Partners Management, said on the social-media service X that he's now shortening the broadening trade, shorting the iShares Russell 2000 ETF IWM at $267.67.

"I am often wrong and always in doubt," he added.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are moving higher following Wednesday's rally, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y rising. Crude (CL00) is falling.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6875.62    -0.74%  -0.81%  0.44%   12.97% 
   Nasdaq Composite                                                     23,224.82  -1.05%  -1.65%  -0.07%  16.07% 
   10-year Treasury                                                     4.257      3.00    12.00   8.50    -37.70 
   Gold                                                                 4826.8     4.17%   7.13%   11.42%  74.49% 
   Oil                                                                  60.63      -0.44%  3.82%   5.61%   -19.60% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Weekly jobless claims and a revision to third-quarter gross domestic product are due at 8:30 a.m., followed by the Fed's preferred inflation gauge, the personal-consumption expenditures price index, at 10 a.m.

Intel $(INTC)$ will report results after the close. Shares of the chip maker have been soaring.

OpenAI's CEO Sam Altman has been talking to Middle East investors with the aim of setting up fresh investment of at least $50 billion, Bloomberg reports.

Alibaba $(BABA)$ stock is rising after a report the Chinese tech giant could be seeking an IPO for its chipmaking unit called T-Head.

Best of the web

Google DeepMind CEO becomes the latest to say that ChatGPT is a dead-end.

The U.S. is actively seeking regime change in Cuba by the end of the year.

Trump controls Venezuela oil funds.

The chart

Goldman Sachs shares this chart of soaring searches for "gold storage" on Google trends as one piece of rationale for a boost to its end-2026 gold price target - $5,400 an ounce from $4,900. Analysts led by Daan Struyven say "key upside risk" - a broadening diversification into gold from the official to the private sector, is starting to happen. In addition to western ETF holdings, up by 500 metric tons since the start of 2025, "newer channels" of demand have popped up based on worries over dollar debasement. They say increased physical buying by high net-worth families and a rise in investor call-option demand "have become a significant source of demand."

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   TSM     Taiwan Semiconductor Manufacturing 
   AMD     Advanced Micro Devices 
   MU      Micron Technology 
   INTC    Intel 
   PLTR    Palantir 
   AAPL    Apple 
   NFLX    Netflix 

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-Barbara Kollmeyer

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(END) Dow Jones Newswires

January 22, 2026 06:54 ET (11:54 GMT)

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