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U.S. equity markets continued their constructive start to 2026, with broad participation across styles, sectors, and market capitalizations. While mega-cap technology continues to attract attention, recent performance data reinforces a theme we have been highlighting for several months — rotation toward value, cyclicals, and smaller capitalization stocks remains intact.

Below we review recent ETF performance across major U.S. equity categories, followed by notable individual stock movers over the past month, before presenting our full strategy outlook.

ETF Performance

Current ValuEngine reports on all covered stocks and ETFs can be viewed at HERE

Top 3 Stock Performers (Global)

Top 3 Stock Performers (US)

Strategy Note

Using StateStreet’s SPDR ETF universe as a microcosmic subset to take a quick look at year-to-date 2026 performance, the top performing mini-sector index ETFs thus far are Aerospace (XAR) and Metals & Mining (XME) at 14.3% and 12.9% respectively. XME gets our highest rating of 5 (Strong Buy). Meanwhile, Pharmaceuticals (XPH) and Utilities (XLU) are off to the lowest starts with price declines of about 0.4% thus far.

The rotation themes we noted as prevalent in the fourth quarter of 2025 are still present at the start of 2026. Although the S&P 500 Portfolio ETF (SPYM) is up 1.8%, the StateStreet SPDR S&P 500 Value ETF (SPYV) is up 2.5% while growth counterpart SPYG has risen just 1.1%. The differences in size are even more dramatic. StateStreet SPDR S&P 400 MidCap Portfolio ETF (SPMD) is up 4.7% while StateStreet SPDR S&P 600 SmallCap Portfolio ETF gained 5.1%. Size matters but in the past four months, it has swung back to the smaller the better.

The relative underperformance in the first six days of the trading year notwithstanding, ValuEngine’s ratings are unperturbed. The Technology and Health Care State Street Select Sector SPDR ETFs, XLK and XLV, respectively, still get our highest rating of 5.

Among all the 2025 outlooks we perused this week, we were particularly struck by the bearish persistence of investment legend Jeremy Grantham, co-founder of Boston-based Grantham, Mayo and Van Otterloo, while reading a recent Barron’s interview. One quote took his pessimism to new extremes: “I would recommend zero exposure to the US, but if you have to own US stocks, own quality stocks.”

In GMO parlance, these are defined as companies with high, stable returns, consistent earnings and dividend growth, low debt, and a degree of monopoly power or price control. These are the factor guidelines in the stated objective of Grantham Mayo’s active ETF QLTY. QLTY and its holdings fit the same profile as three much larger U.S. equity quality factor ETFs: iShares MSCI USA Quality Factor ETF (QUAL), Invesco S&P 500 Quality ETF (SPHQ), and Fidelity Quality Factor ETF (FQAL). All are rated 3 (Hold) at the present time.

To look at individual stocks in QLTY, we used ETFdb, a TMX VettaFI product, as source for QLTY’s holdings and found two stock rated 5 (Strong Buy).  They were global semiconductor solutions provider Broadcom (AVGO) and pharmaceutical stalwart Eli Lilly and Company (LLY).  These were the fifth-largest and 12^th largest holdings respectively of its 36 holdings. 10 more holdings are rated 4 (Buy).  Most notable were largest holding Lam Research Corp. (LRCX), a leading wafer fabrication equipment manufacturer, third largest Google (GOOGL) and seventh largest KLA Corporation (KLAC), another major chipmaker.  The other 4-rated stocks were; Kulicke and Soffa (KLIC); Johnson and Johnson (JNJ); Wells Fargo Corp. (WFC); TJX Companies (TJX); Intuitive Surgical (ISRG); UBER Technologies (UBER); and GE Corp. (GE). 

Since the effects of global unrest are usually short-term and generally unpredictable, we’ll stay invested ourselves, sticking to stochastic computer models based on actual market factors rather than giving into the fear factors capturing headlines on popular investment broadcasts and podcasts.

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