US Equities Outlook 2026

The S&P 500 ETF sits at $743.29, up 0.31% over 30 days and about 2.2% below its 52-week high of $760.32. Over the same month the technology sector fund lost 5.5%, with 5.48% of that coming in the past week alone: virtually the entire monthly decline is seven days old. The Nasdaq 100 ETF gave up 4.16% on the week to $695.33. An index that holds flat while its biggest sector falls that hard is telling you the money moved rather than left.

The receiving end is not subtle. Healthcare rose 6.89% over 30 days, the best sector in our table. Financials gained 4.09% and, at $56.26, trade within about 1% of their 52-week high. Energy added 5.51%, real estate 3.3%, staples 1.8%, utilities 1.6%. The equal-weight S&P 500 rose 2.1% over the month and, at $213.37 against a 52-week high of $215.35, sits closer to a record than the cap-weighted index it shadows.

Small caps confirm the shape of the move. The Russell 2000 ETF, at $294.04, slipped just 0.66% in a week that took 4.16% off the Nasdaq, and is up 6.62% over 90 days.

Breadth improving through a selloff concentrated in one sector is what rotation looks like. Whether it stays benign depends on why the money is moving, and the answer is less comforting than the breadth statistics.

Start with what the selloff is not. Technology remains up 13.76% over 90 days, the strongest quarter of any fund in our table, and at $175.59 it sits about 11.5% below its 52-week high of $198.4. A month of giving back after a quarter like that is not, by itself, evidence of anything but gravity.

The selectivity is the stronger comfort. Outside technology, no US sector lost more than the 0.11% industrials shed over the past 30 days. A market repricing growth or liquidity does not usually confine the damage to one sector; a market swapping one trade for another does.

What the money bought is the discomfort. The 30-day leaders are healthcare, energy, financials and real estate, with staples and utilities positive behind them. That is the tape of our macro desk's regime call, reflation transitioning toward stagflation, with the energy-shock scenario upgraded after the Hormuz tanker strike and oil rising again. The sector table is pricing that shift while the headline index stands still.

Our read is that this is rotation, but rotation with a message: the market is keeping its equity exposure while moving it toward the sectors that survive an inflation that stops falling. The case against that reading is duration. Technology fell hardest in the same stretch our macro state describes real yields sitting within a few basis points of the level it treats as the threshold where equity multiples crack. If that is what last week was, the selling has barely started.

Consumer discretionary, at $115.44, went nowhere over the past month, down 0.04%, and lost 4.13% over 90 days while the S&P 500 fund gained 4.67%. Almost nine points of underperformance against the index in a single quarter is not noise. It is a verdict on the US consumer from the sector paid to price it.

The verdict argues with the official data. Our macro state carries jobless claims falling over the past month and unemployment holding steady, alongside older, unrefreshed flags of consumer stress, weak sentiment and negative real wage growth among them. The equity market has decided which set of numbers to trade. Staples rose 1.27% in the past week while discretionary fell 1.54%, the classic defensive pair pulling apart in the defensive direction.

The spread matters beyond symbolism. Healthcare beat discretionary by nearly seven percentage points over 30 days, and our published equity view lists a widening defensive-rotation spread among its own invalidation conditions. That view rests on two legs, underexposed institutions being pulled back in and credit staying loose, and both held as of our latest reporting, though our book flags the positioning read as stale by its own admission. Neither leg says anything about the consumer, and the sector table says the consumer is the part of the earnings story the market already doubts.

A one-sector tech selloff is survivable. The consumer rolling over is not, because it converts a multiple problem into an earnings problem, and earnings are the one thing this market has not yet had to defend.

Three trip-wires, all close.

Real yields first. Our macro book puts the 10-year real yield within a few basis points of the threshold it treats as the level where equity multiples crack, and it has risen for a month. Technology, still up 13.76% over 90 days even after the pullback, has the most multiple to surrender, and last week's 5.48% drop reads uncomfortably like a rehearsal.

Oil second. Energy stocks rose 4.72% in the past week, the largest weekly gain in our sector table, and our desk raised the weight on a Hormuz energy-shock scenario after the July tanker strike. Equity investors buying energy shares are hedging that path, and the macro state's mapping of what a confirmed disruption would do to equity indices explains why the hedge is worth its price.

The defensive spread third. Healthcare over discretionary already sits near the width our published equity view treats as disqualifying. Rotation into banks and small caps reads as healthy; rotation into healthcare and staples at this pace reads as a market quietly buying insurance.

Against all three stands the breadth. The equal-weight index sits within 1% of its 52-week high, financials within about 1% of theirs, and small caps are up 6.62% over 90 days: corrections rarely announce themselves with the average stock this close to a record. The rotation is the market staying invested while changing its mind about what it is invested for. Respect the first part. Watch the second.