Every market cycle has its own character, but certain patterns appear frequently enough that they deserve attention. This is especially true when evaluating early-year rallies in small caps. Market history offers several notable examples of small caps surging right at the start of the year, and these bursts of strength have often provided insight into where we stand in the broader cycle.

One example comes from January 1972, during the rise of the “Nifty Fifty”, when small caps rose more than 10% in a single month and finished the first quarter up nearly 19%. Another example occurred in January and February 2000, a per

LPL Research’s Strategic Asset Allocation (SAA) sits at the center of our portfolio construction process because it defines how we expect diversified portfolios to generate more stable long-term outcomes across shifting market environments. The SAA is the long-term plan for how major asset classes work together in a portfolio. It sets target weights for stocks, bonds, and diversifiers over a three-to-five-year horizon with the goal of improving risk-adjusted returns through balance, valuation discipline, and purposeful diversification. We review it annually to reflect meaningful shifts in long-run drivers like growth, inflation, interes

Many software stocks have been under pressure in recent months, as investors have started to perceive them as vulnerable to emerging artificial intelligence (AI) technology. As highlighted in the “6-Month Price History of the S&P Software and Service Index” chart, software stocks have declined roughly 27% from their September 2025 high.

6-Month Price History of the S&P Software and Service Index

• Source: LPL Research, FactSet 02/17/26
• Disclosures: All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results.

Is This a Buying Opportunit

U.S. equity indexes have wobbled over the last couple of weeks. Concerns about artificial intelligence (AI) hyperscale spending have hit the high-profile mega cap growth names. At the same time, concerns about the impact of AI on established businesses have rippled through the software and finance industries.

In the short term, markets are always susceptible to headlines and future concerns that haven’t yet come to fruition. However, over the long-term, fundamentals drive markets. And for the most part, they remain supportive.

Let’s explore some of the more important ones.

Jobs Growth Slow bu