Stability for equities expected in first half of 2026

By Matt McAleer

The encouraging inflation news coupled with solid earnings estimates should provide continued stability for equities into 1H2026. After extreme performance dispersion between cap sizes and sector performance over the past five years, the rally has broadened to include small-caps, mid-caps and multiple sectors. In fact, over the past six months, the Russell 2000 has significantly outperformed the S&P 500. Likewise, value has had a mild bounce vs. growth on the back of strong Financials. We currently employ a blend of growth and value ETFs along with individual equities and are comfortable with that allocation. While diversification has been a drag on performance for a decade, cycles ebb and flow, and markets tend to reward strategies that remain flexible over longer time horizons. Currently, we are interested in remaining balanced between size and style. 

From a domestic sector and industry standpoint, the portfolios remain overweight Industrials (XLI, AIRR, XAR), with market weighting in Financials and Technology. It is always a risk to forecast continued strong sector growth, but the relative strength exhibited by these indices and sectors keeps us long. 

As continually noted in our Friday Week in Review videos, international equity markets were outstanding over the recent 12 months. We are allocated 60%/40% developed vs. emerging and will continue to watch the $USD for clues on allocations. We are trying to overcome the persistent international technology index underweight by leveraging capital to ETFs with large tech representation. The primary exposure to this strategy is through Taiwan (EWT), Netherlands (EWN) and So. Korea (FRDM). We are encouraged by the market action of Argentina (ARGT) and hope the broader Latin American market will view the positive market reaction to political reform favorably.

Click here to read the full article on the The Sarasota Herald Tribune website. 

Matthew C. McAleer
President of Private Wealth Management
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