The S&P 500 (SPY) is off to a great start in 2026. The U.S. domination in Venezuela, job increases in the BLS job report in December, and the CES 2026 show added to the positive sentiment. SPY stock gained 1.6% last week and is up by nearly 18% in the last year. Nearing 7,000, what happens after the index surpasses that record closing value?
Investors should watch the 10 stocks that outperformed in the index. Sandisk (SNDK) gained nearly 25%, storage suppliers Western Digital (WDC) and Seagate (STX) gained 16% and 10.4% YTD, respectively. Microchip (MCHP), Albemarle (ALB), Moderna (MRNA), Micron (MU), NXP Semiconductor (NXPI), Axon Enterprise (AXON), and Texas Instruments (TXN) are on that list.
Tech stocks dominated the outperformance list. That increases the risk of overvaluation concerns and a reversal in bullish momentum, sending SPY ETF below 7,000.
To rise further after the 7,000 level, stocks in non-technology sectors need to rise. Inflation is falling, interest rates are declining, and the U.S. government is cutting down on fraud and wasteful spending. In addition, lower regulations in healthcare and the energy industry would broaden the stock market rally. Watch out for Exxon Mobil (XOM) and Chevron (CVX) lifting the markets.
In healthcare, drug firms like Merck (MRK) have already recovered, while Pfizer (PFE) could inch higher.
The odds of an uptrend above 7,000 are more likely than any pullback.
