Where stuck momentum trades might go from here
After experiencing some major gains, three plays of late aren’t delivering the returns to investors they once did. Start with big tech, which has driven the bull market since its start in 2022. CNBC’s “Magnificent Seven” Index has grown nearly 300% in that time, while the S & P 500 is up just under 90%. But in the last few months, the hyperscalers haven’t done much, with the Mag Seven index only up 2.6% over the last six months. Then there’s precious metals. In 2025, gold and silver surged 64% and 146%, respectively. However, after a significant drawdown at the end of January, the commodities haven’t recovered and have been choppy trades. Lastly, there are small caps. The Russell 2000 at one point was up more than 10% in 2026. But ever since its peak on Jan. 22, it has underperformed the S & P and is now only up 1.75% for the year. All have weakened due to a variety of factors, ranging from questions over the artificial intelligence trade , to geopolitical headwinds and mixed economic data. The stalling momentum has come as the major market indexes haven’t moved beyond a small price range either, despite rotation under the hood . So should investors expect these trades to build up momentum again, or are these holding patterns set to continue? Big Tech Nvidia has been trading at levels for months that it first hit in late July. Meta is almost flat since Dec. 1. Even Alphabet , which broke out late in 2025 to become the best Mag Seven stock for the year, is mostly unchanged since late November. Concerns over the massive capital expenditures the hyperscalers are embarking on to build out AI capabilities is keeping investors cautious, according to D.A. Davidson analyst Gil Luria. “These companies that have often been held because of their strong balance sheet and cash flow yields are now zeroing their cash flow yield,” he said. “So that’s causing investors to hold off in anticipation of those companies showing that they’re getting good return on that investment.” NVDA GOOGL,META line 2025-12-01 GOOGL v. NVDA v. META since Dec. 1 2025 chart. Luria added that sentiment might improve for Big Tech if a new AI model is released that particularly impresses people, reigniting faith in the potential for strong returns. But even if there’s not one particular moment, he still foresees these stocks performing well thanks to solid fundamentals that will be reflected in strong earnings and guidance . “It’s just a matter of these big companies growing revenue at an accelerating pace,” Luria said. “Eventually, they’ll get rewarded for it.” Gold and silver Precious metals at first continued their 2025 surge into January, but then plunged after President Donald Trump nominated Kevin Warsh to head the Federal Reserve . Gold is only up 6% since Feb. 1, while silver is down nearly 0.8%. But Alex Shahidi, co-CIO at Evoke Advisors, said not to read too much into recent moves in metals. “When things go up a lot, even a big downturn could just be profit-taking,” he said. He added gold, despite being viewed as a safe-haven asset, couldn’t break out this week amid the U.S.-Iran war thanks to countering headwinds of a stronger dollar and inflationary concerns, which make non-yielding assets less attractive. XAU= XAG= line 2026-02-01 XAG= vs. XAU= since Feb. 1 2026 chart. While Shahidi explained the silver outlook will be more dependent on future economic conditions, as it’s an asset used for manufacturing a wide range of products, the case for gold is still positive despite a weaker month. That’s thanks to geopolitical tensions that are expected to stay elevated for some time, demand from central banks and investor understanding of gold’s consistent historical returns. “The light turns on for a lot of investors, and I think you can get these big shifts as that occurs,” he said. “It’s hard to predict when that’s going to occur, but all the data is there for people.” Small caps The Russell 2000 started 2026 by outperforming the S & P for its longest streak in nearly 30 years . But that outperformance didn’t last. Chris Tessin, lead portfolio manager at Acuitas Investments, attributed a February slowdown in the sector partially to changing interest rate expectations. Small caps are very rate sensitive as the companies frequently borrow to fund their growth. Investors saw the chances of further cuts from the Fed weaken during the month, and there were even some hints of rates could accelerate . Heightened volatility to start March hasn’t been helpful either. “When you have aggressive rotations between risk-on and risk-off, small-cap will likely be impacted more than large-cap,” Tessin said. .RUT .SPX mountain 2026-01-22 .SPX v. .RUT since Jan. 22 2026. Heading into the year, many analysts were bullish on small caps , with hopes for an accelerating economy, rising earnings growth and falling interest rates. While the factors driving small caps higher may be shifting, the thesis is still intact, Tessin said. “Small caps tend to be the tip of the whip when it comes to market swings,” he said. “It may go down more, but it’s likely to recover faster. … There’s still folks looking at the valuations and saying, ‘small relative to large is still compelling.'”
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