Wall Street sums up January: these are the industries that left tech stocks dust

In a monthly summary, the S&P 500 index climbed about 1.4%, the Nasdaq added about 1% to its value and the Dow Jones advanced about 1.7%. At the same time, the geopolitical upheavals were felt in the commodity and currency markets: the dollar weakened globally to near four-year lows; the price of precious metals soared to new highs and then recorded a historic drop at the end of last week; and price Bitcoin collapsed below the $80,000 mark. In view of the climate in the markets, it can be said that if the report season had not started on the right foot and turned out to be particularly positive, it is possible that Wall Street would not have ended the month in the green.

When you look at the month of January, you can see that while cyclical sectors of the S&P 500, such as industrials and raw materials, produced strong performances, the stocks of the “Magnificent Seven” – Nvidia , Alphabetical (Google) , dark , Amazon , Tesla , Meta andMicrosoft – remained relatively behind. The basket fund Roundhill Magnificent Seven ETF, which tracks the “Magnificent Seven” and gives them equal weight, struggled to rise during the month and ended it with a negligible increase of about 0.3%.

The trend, of course, is also reflected in the performance of the IT sector of the S&P 500 (which includes technology stocks), which fell during the month by approximately 1.7%. The sector that produced the strongest performance in January was the energy industry, with a jump of over 14%; This is largely due to the effect of the American takeover of Venezuela and the tensions between Iran and the US on the oil market, but also against the background of increasing energy demands in favor of the expansion of AI infrastructure. As mentioned, adequate increases were also recorded in the industrial sectors (6.6%) and raw materials (8.6%).

In Marketwatch, we specifically mentioned the basic consumer goods industry, which is traditionally considered a defensive area of ​​the stock market, and jumped during the month by about 7.5%; This, when according to FactSet data, in the last three years (2023-2025), the sector lagged behind the S&P 500 by a whopping 67%.

Keith Lerner, chief investment strategist at Truist Advisory Services, told MarketWatch recently that “there is a rotation into things left behind.” He added that at the beginning of a new year, investors tend to reexamine their investment portfolios and see which areas of the market are “beaten” and may look relatively attractive. This is also consistent with The predictions of some of the largest investment banks in the US for 2026including Morgan Stanley and Bank of America, with the latter upgrading its recommendation for the consumer staples industry to “overweight”.

AI trading is also changing shape

Many analysts welcome the developments and explain that the increase in market breadth – that is, the proportion of shares that participate in price increases – is a sign of a healthy stock market. Liz Ann Saunders, chief investment strategist at Charles Schwab, said in an interview with Marketwatch that “rotation is almost a trading style now,” and that rotation itself has become the new “momentum trading.”

In this context, it is also worth noting the Russell 2000 index of small stocks, which during the month provided an impressive return of approximately 5.3% and by a margin surpassed the S&P 500, which climbed during this period by only 1.4%. The increase comes against the background of strong growth data published in the US, alongside expectations for interest rate cuts by the Federal Reserve, to which the smaller stocks are sensitive; but Saunders notes that optimistic forecasts for the profits of the companies included in the Russell 2000 are also pushing the index upwards.

In the financial magazine Barron’s, we noted at the end of last year that according to FactSet data, analysts expect the Russell 2000’s earnings to have an average annual growth rate of 35% in 2026-2027, compared to a rate of 14% in the case of the S&P 500. While the investment bank Goldman Sachs recently estimated that the consensus regarding the index’s earnings growth for 2026 (61%) is “much too optimistic”, it also marked significant opportunities for active stock pickers. Ben Schneider, an analyst for the bank, pointed out that the spread of the returns of the Russell 2000 is more than twice as large as that of the S&P 500, and that this “points to a particularly fertile ground for the production of alpha (excess yield)”.

AI trading is also undergoing considerable changes. David Wagner, head of equities and portfolio manager at Aptus Capital Advisors, told MarketWatch that enthusiasm in the sector is extending beyond the tech giants, pointing to smaller chip stocks such as Lam Research and-KLA As those who benefit from the trend. Louis Navellier, chief investment officer at Navellier & Associates, told MarketWatch that “AI trading has become concentrated on the hardware side. There are growing concerns that the software portion of AI growth will arrive in 2027-2028, after the data centers are already built.”

Another evidence of the relative strength of the hardware side in the field of artificial intelligence can be found in the performance of information storage stocks, which recently exploded against the background of the acceleration in demand for memory products, which are required for the development and operation of AI infrastructures. stock SanDisk recently completed a jump of about 1,500% within a year, when other major players in the field such as Micron , Western Digital andSeagate recorded returns of about 385%, about 455%, and about 360%, respectively.