Episode summary
Tech Stocks Power Gains at End of Jittery Week for Wall Street
Bloomberg Surveillance
· · Guests: Ann Miletti, Alexander Guiliano, Emmanuel Cau, Lori Calvasina
Summary
The guest argues that 2026 is shaping up as a shift from the low-quality rally of late 2025 toward higher-quality stocks, with earnings quality and earnings growth becoming more important than simple market-cap momentum. She says the market is already showing that change, pointing to the S&P 600’s 3% gain even as the broader market was down and the Russell 2000 was up, which she sees as evidence that investors are refocusing on fundamentals.
She also sees room for small- and mid-cap stocks to keep improving because earnings growth looks better there, helped by regulatory changes and a lower-rate environment. The same logic supports her constructive view on emerging markets: after a decade-plus of underperformance, she thinks improving fundamentals and growth prospects could lead to a long cycle of outperformance, especially with dollar weakness as a tailwind.
Across the market, she says mega-cap growth is still positive but decelerating, while other industries and market-cap tiers are seeing accelerating growth and stronger free cash flow. That, she argues, is why investors are increasingly rewarding quality rather than chasing the biggest names.
Key takeaways
- The guest says 2026 is likely to favor quality over the low-quality small-cap rally that dominated late 2025.
- She points to the S&P 600 being up 3% as evidence that investors are rotating toward higher-quality small caps.
- She argues small- and mid-cap earnings growth is improving because of regulatory changes and a lower-rate environment.
- She stays bullish on emerging markets, saying long periods of underperformance can precede five, six, or ten years of outperformance.
- She says mega-cap growth is decelerating while other industries and market-cap tiers are seeing accelerating growth and stronger free cash flow.
Notable quotes
“What we saw toward the tail end of 2025 was a really, really strong, low quality rally, particularly as it went down the market cap spectrum”
“typically earnings quality and earnings growth wins over time”
“the market is now switching to fundamentals and quality”
“Earnings growth looks much better for small and mid-cap stocks”
“But more importantly for me, it's in free cash flow”
How the episode opens
Tom, I think the big difference in 2026 is going to be equality. What we saw toward the tail end of 2025 was a really, really strong, low quality rally, particularly as it went down the market cap spectrum. So, you know, strong small cap outperformance in the tail end of the year.
But it was the non-journalists, the lowest market cap names within the Russell 2000 that did well. And as you know, Tom, you know, typically earnings quality and earnings growth wins over time. And so what we're seeing in 2026, it's early but is a real shift to quality.
So although, you know, last week the market was down, right. The Russell 2000 was up. But more importantly, the S&P 600, the higher quality, small caps were actually up 3%.
So showing you the market is now switching to fundamentals and quality. Paul, can we mention that Emily's rocking it today in something like ten or 12 below zero? I see your forecast as like up in that part of the world.
It's gonna be like 30, 40 below windchill any. But she going to cancel today? Oh, my God.
I don't know. Maybe it is -16. Real temperature, -40 below with the windshield.
It's horrible. But I mean, she's a native. She's used to this stuff.
I mean, yeah, I mean, but I'm I'm. I'm on the first flight, the route. Oh, I was going to say all spring, don't they, on the Turks and Caicos.
Exactly. Hey, and is this a year where small and mid-cap stocks can perform? Because we think that the last several years it's really been the big cap tech names that have been leading this market.
Yeah, Paul. And look, I think, you know, and this is something I talked about a lot last year, it took a long time for it to play out, but the market did seem to want to broaden out.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai enthusiasm
- fed rate outlook
- u.s. consumer sentiment
- chip demand from china
- earnings season strategy
Companies and tickers mentioned
- NVDA
- INTC
- BCS
- JPM
- AAPL
- SLB
- AA
- Allspring Global Investments
- Nvidia
- Intel
- Resonate Wealth Partners
- Barclays
- JPMorgan Chase & Co.
- RBC Capital Markets
- Apple Inc.
- SLB
- Alcoa Corp.
Watch the episode
Watch “Tech Stocks Power Gains at End of Jittery Week for Wall Street” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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