With Q4 2025 earnings largely complete and 75% of S&P 500 companies beating expectations, fundamentals remain constructive. That said, market leadership in 2026 looks very different than in 2025. Energy leads at +23% year-to-date (YTD), while Technology is down -3.4%, highlighting a clear rotation away from last year’s growth leaders.
We are still in the early days of the 2025 Q4 earnings season, but the market’s tone has already shifted. January marked a decisive move away from the narrow leadership that defined much of last year and toward broader participation across sectors.
It’s the beginning of the year and we’re witnessing a rotation into cyclicals. Industrials and Materials were up over 7% in the past month. Utilities and Consumer Staples were down close to 2% during the same period. This reflects a risk-on tone as investors position for growth.
Q3 2025 earnings have been broadly resilient, with 87% of S&P 500 companies beating earnings per share (EPS) estimates as of October 31. But beneath the strong headline numbers, earnings breadth is narrowing. Markets are increasingly rewarding companies and sectors that meet two critical tests: 1) Turning AI/capex investments into credible gains; 2) Operating in sectors with structural quality (cash flow resilience, healthy balance sheets)
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