Dow Jones Hits 50,000: What Market Breadth Signals for 2026

Hello, and welcome back to another episode of blue Chip. Now you have Daniel Dusina, chief investment officer. Matt Mondoux, senior financial advisor, and Dan seder, managing partner.

So we’ve got plenty to unpack today. What I would say is we will predominantly focus the conversation on year to date performance. Some observations that we have that includes both domestic and international observations. Before we segue a little bit towards other asset classes like crypto, as well as taking a step back and understanding the macro perspective that’s coming down the pipeline.

So without further ado, I think it’s very fair to say that it’s been a volatile experience year to date. And you wouldn’t necessarily glean that from just looking at headline market returns. I would say that right now, the biggest headline is that you’ve got US equity markets that have staged a very strong rebound, culminating with the Dow Jones Industrial Average closing above 50,000 for the first time ever.

And this is as of this recording on February 9th and of week, February 6th. So after a pretty volatile stretch in January that included a sharp sell off around January 20th due to tariff fears, you had stocks that have really bounced back decisively in early February. You know, for example, the Dow jumped more than 1200 points on Friday, February 6th.

Leading major indexes. Higher tech stocks have helped lead that recovery, with companies like Nvidia and Broadcom posting strong gains as chip and artificial intelligence spending optimism has returned. And despite this milestone, the rally has been somewhat even uneven. Sorry. The S&P 500, which is a cap weighted index that we, as we’ve talked about, still shows pretty choppy performance.

And the Nasdaq tech heavy index lags behind, indicating that this rotation into cyclicals and value names has very much been alive and well. So before I kind of open up the conversation, what I would say is that breaking 50,000 for the Dow is a psychological milestone and may attract more tactical buying. However, the underlying breadth and sector divergence suggest some caution.

What do you guys make of this? And and I guess specifically within the context of some of the themes we’ve touched on already this year, how does this make you guys feel? Well, I’ll start. I mean, I think it’s nice to see the markets being, lot higher by stocks other than The Magnificent Seven. You know, I think that that’s been the theme really for the past 23, 24, 25, 20, 23, 24, 25.

And it’s nice to see 2026 start with some other businesses. You know, when you look at the Dow, the top five holdings are Goldman Sachs at 11%, 12%, caterpillar just over 8%, Microsoft just over five, Home Depot just under five and Sherwin Williams just under five. So you have a lot of different types of businesses leading the Dow, higher than the types of businesses that will ultimately lead the S&P and the Nasdaq higher.

So I agree with that. I do think it’s nice to see a different set of names, but I think it’s important to remember the construction of these indices is flawed. And even if you’re looking at the Dow now versus the S&P, where the S&P is a market cap weighted index, the Dow Jones price weighted. Yes. Great to see the Dow Jones go above 50,000.

It is the people’s index. That’s what people talk about. No one ever talks about moves in the S&P 500. They say the Dow was up 1200 points. I think the real flex here is the equal weight S&P 500 going out at all time highs. Yeah and I wholeheartedly agree 500 all time highs. That’s the flex. It’s not. So I don’t want to get wrapped up in the Dow I think it is important.

But you’re seeing participation across the board. Yeah. Well which is important right. We’ve talked about this at length over the last few years. A good measure of the market is not necessarily a cap weighted index that has 35% of its exposure in five names, right. So if you want to get a reliable gauge on market health and market optimism, seeing the S&P 500 equal weighted index up north of 5% this year versus the S&P cap weighted, that was actually negative at one point last week.

To me, I can be very optimistic about that because it is a sign of greater breadth, greater fundamental momentum in a larger set of businesses. And that doesn’t even begin to talk about some of the smaller businesses and how we’ve seen them progress this year or international markets. We’ve seen the momentum continue there as well. I think all of this is ultimately signs of a very healthy market.

And it’s and it’s also very grounded in fundamental developments. Right? I mean, we talked about, international, for example. Right. Matt. Yeah, I mean, you know, international, but that’s been nice to see as well, you know, 25 2025 international outperforming U.S. markets that trends, you know, can it continue. Lot of reasons for it I think fundamental fundamentally based but also some of the things going on in there.

You know, political central bank landscape as well. Yeah, I mean, and I think that, you know, again, we we’ve talked about the the dollar in the past as a driver of international markets. But keep in mind, you know, international is this is this very easy way to talk about many, many different countries that have many different fiscal and monetary policies affecting them.

But when you see a, an environment for international markets from a monetary policy perspective, it is generally supportive. You could say the same about the fiscal backdrop and international markets generally very supportive, which is why you’re starting to see money flow towards those international markets. And not necessarily at the expense of US exposure, but there there are very friendly policies that have emerged and have pushed the dollar lower and have been good for international markets.

And again, if you want to talk about the technical perspective, that kind of adds up to that’s the thing. You know, international markets have been cheap for a long time. Cheap, you know, an absolute level and very cheap relative to US markets. But they needed a catalyst. And we might finally be in a situation where they’re having a catalyst.

And, you know, we often comment when international forums, it usually does it for a longer period of time. It could be multi-year. So we could just be in the first innings of international markets starting to outperform us. Yeah, yeah. How about domestically. What about large versus small. Yeah. And you know, the the theme that has emerged, you know, we were seeing the Russell 2000 index, which is probably the most common measure of small cap stocks, up 8.5% year to date.

And that is, you know, obviously outperforming large cap. So, you know, you can think of this in a couple different ways. Number one, the interest rate backdrop will generally be a larger driver of smaller businesses when compared to large businesses. But I don’t think that that’s my main takeaway right now. Let’s break that down. So what you’re saying is, forward looking interest rate, interest rates in the future are projected to go down.

If you’re foreseeing a declining interest rate environment, you would expect all else equal small cap outperforms large cap. I would, and if you look back through historical periods of monetary policy that includes declining interest rates, the three full interest rate cutting cycles that we’ve had between 2000 and today, all three of those cycles did show small cap outperformance relative to large cap and is, is one of the main drivers that I’m sure there’s others, but it’s just harder for small businesses to get capital.

So if they’re out there, borrowing money and you’re borrowing money at high rates versus low rates, the larger companies can absorb higher. Yeah, I think that’s a very easy way to think about it. The interest rate burden, the interest burden for a small business, proportionately to a large business is just much higher. Right. So if you get that easing and becoming less of a factor, you start to expand the multiple for a smaller business.

So long story short I would agree with you Matt. I think there are legs for that international story to continue. I think there are a reasonable amount of legs for that small cap story to continue. But, you know, to kind of close out the market returns portion of this discussion. I think the question that everyone continues to ask is, well, within the US, what do we do with this artificial intelligence trade?

And I don’t think there’s a very easy answer to that. But because of how quickly the technological developments are coming down the pipeline, I think you’re going to start to see a diversified set of winners and losers. Most recently, you’ve seen a lot of the software players take it on the chin in the market because of fears around disrupted business models and less enterprise usage of some of this software.

At the same time, what’s what’s continued to be a leader in the market is the backbone of artificial intelligence. The power generation story, I guess. Long story short, I don’t know if 2026 ends up being a year where the usual suspects, reap the biggest benefits, both from a financial perspective and a market return perspective, I think you’re going to start to see a more clear delineation of winners and losers as it pertains to this artificial intelligence story, and it may not just be your your usual suspects in The Magnificent Seven.

So again, we don’t have all the all the cards to to to be able to tell the full story right now. But that’s just an observation that I have from the early innings of 2026. And if it’s priced to perfection, there’s plenty of opportunities outside of those big, big names. The max other names. So go go elsewhere. There’s other opportunities.

Take advantage of them. You don’t have to, but continue to pursue or chase opportunities that are priced for them. Yeah, that’s exactly right. And the market’s focused on those underpriced names at least thus far this year as well. Maybe one other asset class that we can kind of shift our conversation towards is is crypto. I mean, crypto markets have remained incredibly volatile.

Bitcoin and other altcoins have been under pressure. I think this has been a pretty dramatic story so far this year. Deep drawdowns, intense volatility and ultimately just debate on whether the worst is over. So what has actually happened? Well, you’ve had bitcoin tumble from multi-month highs. And at times dipped below 60,000, which has wiped out a large chunk of its gains since since late two, 20 2025, other coins like Ethereum and Ripple also declined.

So I think what you’re seeing right now is broad risk assets selling potentially some of this is coming from leveraged liquidations and ETF outflows. You did see a bit of a rebound last week with Bitcoin consolidating above 70,000. But to me that confidence just remains very fragile right now. So I’m not really sure that I want to make more out of this than we need to.

But part of the reason that Bitcoin and other cryptocurrencies, from a retail investor perspective, have been attractive are not just because of the return potential, but be because of some gleaned diversification benefits. Whether or not that actually exists, I think we’re still too early to the cryptocurrency story to be able to say definitively, but, you know, again, we are not investors in these cryptocurrencies at scale.

I think it’s really hard for us to get comfortable around something that is near impossible to value. I mean, I always talk about it like, a piece of art or a bottle of wine. What is it worth? Well, it’s worth whatever anyone’s willing to pay for it, right? How am I supposed to get comfortable with valuing an asset like that?

It’s really hard to. There’s no cash flows. You know, there’s there’s no real fundamental backdrop for it is this is super opaque, right? You know, there’s an element of if you buy a piece of art or something, you kind of know who you’re buying it from. Who’s on that, what did it go for in the past potentially. And this is this is totally different I mean, so these things are going to happen.

Crypto got a lot of attention really early in the grand scheme of financial assets. This has not been around long. These things will happen. It’s going to take time for institutional adoption to really gain steam. It’s happening. It is happening but still can’t. Well, I guess we could we could say this was this is a reflection of the risk appetite in the market.

Is that true? Yes. I do think that cryptocurrencies are a reflection of risk. If risk is running rampant in these asset classes will probably go up. But I also think there’s there are times for technical sell offs. It trades. It’s a very technical asset class. Daniel. To your point there’s not earnings okay. So we can’t value you can’t run a p e price to earnings analysis to understand is Bitcoin over undervalued a lot of times it’s a technical trade.

And what you see is when enough people start running for the door everybody follows right. It’s it’s momentum. So I think you saw some momentum to the downside. Where does it go from here. Who knows. Who knows. I mean, it’s not like, we can get up or down, but, I think it’s a very much a technical.

Yeah, definitely agree with that. And maybe just to close out, some things that the market is focused on or where the market focus is shifting towards. I think that as we wrap up earnings for the fourth quarter, at least in the US here, market is starting to shift towards macro data and yield signals. So looking ahead, I think that upcoming US macroeconomic data, especially that which pertains to jobs, the labor market in general, inflation, anything that could steer the Federal Reserve and ultimately risk assets.

I think those are going to be increasingly important in terms of shaping the market direction. So the jobs data that’s going to come out later this week, as well as the consumer price index, I think these are going to continue to be major catalysts. Strong figures out of these could end up keeping federal, sorry, Federal Reserve policy tight.

Whereas we’re starting to have the market price, some interest rate decreases in the coming months. If you did get softer readings here, it could end up being a scenario where bad news is good news, because people start to think that the fed is going to cut more than they originally expected. But I think by and large, these, these themes that we’ve seen develop in the equity market this year, cyclical stocks versus tech growth versus value, this rotation trade, if you were to get continued developments economically that support this trade, I think there is plenty of room to run.

And keep in mind when I talk about we talk about the the S&P 500 equal weighted index outperforming. A lot of that is supported by companies that are undervalued being bid up and having their valuation catch up to some of these higher growth type names. So if you do get the backdrop economically, that is one of call it softer job growth, moderate inflation.

I think that trade does end up continuing. And the closing point here is, is just that economic data is no longer background noise. It’s the main event right now. And I think that does continue to be the case as we progress through 2026.

Anything else? That’s all I got for now. Covered it all to wrap. Okay. Well, as always, thank you so much for tuning in to another episode of blue Chip. Now we look forward to speaking with you again soon.