Good morning, investors. Multiple Wall Street banks saw more than a 50% chance for an economic downturn during President Trump’s opening months to his second term, yet that hasn’t panned out.

That resilience is showing up more and more across different pockets of the stock market.

The most neglected corner of the stock market is actively pushing back against bearish calls.

The small-cap Russell 2000 has surged 8.2% in the first three weeks of 2026, roughly tripling the gains of the three other benchmark indexes combined.

After several years flocking to mega-cap multinational technology stocks, investors are rotating into interest-rate sensitive, domestic-focused companies.

As of Thursday, the Russell 2000 has outperformed the S&P 500 for 15 consecutive trading days, the longest streak in three decades.

The decisive shift — as illustrated by the Russell 2000 to S&P 500 ratio — signals a vote of confidence in the macro outlook, effectively pricing in durable economic growth.

A spike in the Russell 2000 to S&P 500 ratio suggests that investors have moved off defensive positioning to seek returns in riskier, cyclical pockets.

Indeed, the Russell 2000 is one of the equity market’s clearest barometers for confidence in the US economy. It’s made up of smaller firms, regional banks and mid-market industrials that live and die on Main Street.

These companies feel changes in borrowing costs faster, depend more heavily on domestic demand and are less insulated from recessions compared to global mega-caps.

For what it’s worth, a bull market that broadens to small-cap stocks has historically coincided with healthier market internals, not late-cycle exuberance.

The message coming out of small-caps remains clear:

And with the Fed set to lower interest rates at least one more time in the months ahead, the small-cap party may just be getting started.

📉 Intel stock dropped double-digits. It beat earnings expectations but offered soft guidance for the months ahead. The company also reported a net loss of $600 million. (CNBC)

🚀 The US economy grew at the fastest rate in 2 years. GDP rose at a 4.4% annual pace in the third quarter, up from 3.8% in the prior period. The economy hasn’t grown that fast since the end of 2023. (AP)

📊 The Fed’s preferred inflation gauge hit 2.8% in November. The personal consumption expenditures price index came in as expected, while personal income rose 0.1% in October and 0.3% in November. Consumer spending also rose 0.5% in both months. (CNBC)

🏦 President Trump sued JPMorgan for de-banking. The complaint accused the firm of trade libel and breach of implied covenant of good faith and fair dealing. The suit is for at least $5 billion. (Bloomberg)

I sat down with Wall Street veteran Brian Belski, founder of Humilis Investment Strategies, to unpack his favorite stocks for 2026, why the market favors stock pickers, his expectations for the AI trade and more.

Tune in on YouTube, Spotify, or Apple Podcasts.

🗓 January 23, 1964: The US ratified the Twenty-Fourth amendment, prohibiting fees and taxes for voting in federal elections, reshaping voter participation for years to come.

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