NDR: Return for stock pickers?

Stock leadership has shifted sharply in 2026. Through January 26, 62% of S&P 500 stocks have outperformed the index, the highest share since 2001. After three difficult years for stock pickers, this broader participation appears constructive and creates more opportunities for active managers. 

History urges caution. In three of the four prior years when more than 60% of stocks outperformed, the S&P 500 declined, with a median loss of 11.6%. Those periods also featured an unusual mix of leadership. Consumer Staples, a defensive sector, outperformed in most cases, while small-caps beat large-caps every time. Both Staples and small-caps are leading so far in 2026, echoing those past warning signals. However, it is still early in the year, leaving time for trends to change.

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