By Paul R. La Monica

Everywhere you look, stocks of all stripes are hitting new highs. That should be great news for investors as the market broadens out to start 2026.

Sure, there are tech darlings among those setting records, including Taiwan Semiconductor and Sandisk. But they're joined by Morgan Stanley, Goldman Sachs, Johnson & Johnson, Caterpillar, Northrop Grumman, and General Dynamics, just to name a few. And several exchange-traded funds focusing on small-caps, mid-caps, and international stocks (for both developed and emerging markets) are near record levels, too. The broadening of the rally is picking up steam.

You wouldn't know it from looking at the major indexes. The Dow Jones Industrial Average dipped 0.3% this past week, while the S&P 500 fell 0.4%, and the Nasdaq Composite dropped 0.7%. While the declines were small and the indexes remain near all-time highs, the fact that they are underperforming small-caps, international stocks, and the equal-weighted S&P 500 is another sign that investors are looking beyond the usual suspects for stocks to buy.

"Everything is participating," says Chris Galipeau, senior market strategist for the Franklin Templeton Institute. "This new rally could have legs for a couple of years."

That could be especially true if earnings growth for the rest of the market catches up to Big Tech. Earnings for the equal-weighted S&P 500 are expected to rise 10% this year, while profits for the S&P Small Cap 600 are forecast to increase by 15%, in line with the expected growth rate for the cap-weighted S&P 500.

"There is more potential for a persistent broadening out of the rally as the earnings-growth gap for the Magnificent Seven to the rest of the market should continue to narrow," says Michael Arone, chief investment strategist with State Street Investment Management. "That is really fueling some of this rotation."

It's also encouraging to see that the Dow Jones Transportation Average, made up of leading trucking, railroad, airlines, and shipping companies, is at a record high, too, a sign that the market may be seeing a pickup in economic growth. "The increase for transportation stocks is sending a telltale sign that the economy is rebounding," observes Brian Henderson, chief investment officer for BOK Financial.

This doesn't mean that investors should abandon the artificial-intelligence trade wholesale, but it's no longer as simple as buying Nvidia, Broadcom, and other hyperscalers. "AI is a very crowded trade," says David Souccar, chief investment officer of the global quality growth boutique for Vontobel Asset Management. He prefers companies in the power-management business as an AI play, such as Germany's Siemens Energy and the United Kingdom's National Grid.

While the broadening may disrupt the certainty of simple themes, it should be a lot more fun.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 16, 2026 19:03 ET (00:03 GMT)

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