In their 2026 outlook, our Investment Management Team anticipated there would be downside in broad equity markets while the average stock gained value, reassuring clients that they were positioning Credent to take advantage of continued market shifts. These expectations took shape with the market broadening in January. How did February stock market performance unfold?  

What Does Broadening of Performance Mean?

First, when we discuss a “broadening of performance” or “widening breadth,” we mean that market sectors or stocks other than those that have historically succeeded are starting to participate in that success.  

In the past, the market’s performance has been relatively narrow. We’ve seen the likes of the Magnificent 7, and technology, consumer discretionary, and communication stocks led the market.  

Now, with a broadening of performance, stocks in more value-oriented sectors, such as energy and materials, are starting to shine.  

For example, this year (through February 24, 2026), the energy sector is up roughly 23% while the financial sector is down about 7%, creating one of the widest gaps we’ve seen between sectors in the S&P 500 (30%).  

What other indicators demonstrate broadening? 

February Stock Market: The S&P 500 vs. Small-Cap and Mid-Cap Stocks

As of February 24, the S&P 500 was up close to 1% this year. In contrast, the equal-weighted S&P 500, U.S. small-cap stocks, and U.S. mid-cap stocks are outperforming the S&P 500 by 6%, 8%, and 9%, respectively.  

What is causing this performance gap?  

Tech stocks (represented by the S&P 500 Information Technology Index) are down roughly 4-5% YTD and are the main brake slowing the S&P 500’s performance.  

What does this mean for Credent clients?

How are Credent Clients Invested?

As advocates of diversification and proper risk management, our Investment Management Team avoids overconcentration. (And have previously cautioned against chasing AI momentum.) Broadly speaking, our diversified client portfolios have exposure across style classes and market caps.  

In the large cap space, we are overweight in growth, but that positioning has narrowed, and the team is shifting into value-oriented sectors.  

Additionally, 15-16% of our equity portfolios are in mid and small caps. In anticipation of some of the current broadening, our experts shifted our allocations through individual stock selections, choosing mid-cap and small-cap stocks from companies that are profitable and growing in profitability, hold decent valuations, and have the ability to generate strong cash flow.  

In other words, our Investment Management Team believes that all investment strategies work some of the time and no investment strategy works all the time. When the market calls for allocation adjustments, our team strategically shifts while maintaining healthy variety in client portfolios.   

How Will We Invest Going Forward?

Our team continues to analyze when to shift even further from the S&P 500 to capitalize on market broadening. One indicator they watch is the bond market, as it tends to be one of the best ways to know what to do in the stock market.  

For example, examining the yield curve of the U.S. Treasury market today and the yield curve from one year ago, we can see that today’s yield curve is lower and steeper than the curve from a year ago. A steeper yield curve (with the 30-Year Treasury on the far right of the curve showing strong projected yields) tends to indicate a better expected backdrop of economic activity over the long term. Our experts use overall economic signals like this when shaping equity portfolios.  

Overall, the market’s current broadening did not surprise our Investment Management Team. They will practice due diligence to understand where the market may be headed in the future, positioning client portfolios to take advantage of any shifts while continuing to abide by proper risk management techniques.  

To talk to an advisor about the February stock market, reach out using the form below.