Coming off a 3rd straight year of double-digit gains

February 3, 2026

Coming off a 3^rd straight year of double-digit gains for the S&P 500 we wondered if we could make it 4 straight years.  This is the 4^th time in the last 50 years we have seen 3 consecutive years of double-digit gains, but only once did the double-digit win streak last for more than 3 years. 1995 through 1999 saw double-digit gains for 5 straight years.  A megatrend is described as “a large-scale, long-term, and transformative shift that impacts societies, economies, and industries worldwide for decades”. In the late 90’s that megatrend was the internet, and many think the adoption of artificial intelligence is another megatrend.  If it is, we could see stock market gains for a prolonged period.  The “January Effect” is a seasonal stock market anomaly that points to a positive January being followed by a positive year more than 80% of the time.  At the end of the month the S&P 500 had gained 1.4%, but the big winners were the small cap stocks with that index gaining 5.6%. Oil prices jumped by nearly 15% and gold exploded to a new all-time high before closing the month with a gain of 12%.  The interest rate on the benchmark 10-year Treasury edged higher.

The month began on a Friday following the 3-day weekend. Over that weekend we learned the United States had taken the President of Venezuela into custody.  The uncertainty of this event sent futures on a wild ride, but when the market opened on Monday it was “rally on” and that buying continued Tuesday sending all major indices to new all-time highs. On Friday we learned only 50,000 new jobs were created in December, which was seen as encouraging the Fed to lower interest rates and the first 6 days ended with the S&P 500 gaining 1.8%. The following Monday we learned the DOJ had opened a criminal investigation of Fed Chief Powell which was greeted with a sigh.  The next day we learned CPI in December was unchanged from where it was in November of 2024, but geopolitical events continued to capture the headlines. At the end of the week, we began seeing Q1 earnings reports that were encouraging, but the S&P 500 ended the week with a loss of .4%. The 3^rd week began on Tuesday after the Monday MLK Jr. holiday and was dominated by more Trump tariff tantrums related to taking possession of Greenland.  The Europeans responded in kind and fear of a trade war with our allies, sent the S&P 500 more than 2% lower. Over the next 2 days cooler heads prevailed, and Trump announced he had the framework for a deal on Greenland.  For the week, the S&P 500 was down .4%. The final week had a positive tone as 32% of all the companies in the S&P 500 reported quarterly results that were, in general, better than had been expected.  On the last day of the month Trump appointed Fed veteran Kevin Warsh as the new head of the Federal Reserve and the market reacted by eliminating the gains from earlier in the week. The week ended with the S&P 500.

February is one of those months with no clear direction. In January we see the largest inflow of funds into 401k plans, and we also know money managers are going to be buying back stock they sold for tax losses in December.  In February we have no seasonal trend.  Over the last 50 years the month has produced an average return of -.1% and has been up just 4 more times than down. The S&P 500 has moved higher for 9 of the last 10 months so it would not be surprising to see some profit taking.  However, corporate earnings reports will keep coming and they have thus far been solid, which is supportive of stock prices.  We also expect geopolitical events, both known and unknown, to play a role during the month.  We do believe we are in an artificial intelligence megatrend, but stocks are richly valued and we would not be surprised to see a pullback that we would view as an opportunity.

If you know someone who would be interested in learning more about Greenberg Financial Group or taking advantage of our complementary financial plan, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  Previous shows are available on the iHeart app, our website or your favorite podcast platform.  Simply type in” Money Matters with Dean Greenberg”.