JPMorgan strategist Michael Parker identifies broadening market participation as the defining narrative for 2026, highlighting increased momentum across sectors and smaller-cap stocks. A shift toward wider economic engagement is underpinned by concrete data on earnings growth and valuation dispersion.
- 58% of S&P 500 companies posted YoY earnings growth above 10% in Q1 2026
- Russell 2000 P/E ratio rose to 19.3x in January 2026 from 15.7x in early 2024
- S&P 500 stocks above 200-day moving average hit 61% — highest since late 2023
- NYSE AD Line achieved strongest 12-month cumulative gain in two years
- ETF inflows into diversified thematic funds totaled $12.4 billion in January 2026
- Tech-focused ETF inflows were $4.7 billion during the same period
The dominant theme shaping financial markets this year, according to JPMorgan strategist Michael Parker, is the broadening of market leadership beyond a handful of megacap technology stocks. In recent analysis, Parker noted that 58% of S&P 500 companies have posted earnings growth above 10% year-over-year through the first quarter—a significant uptick from just 32% in the same period of 2024. This widespread improvement reflects stronger performance across industrials, consumer discretionary, and healthcare sectors. Valuation metrics further support the trend: the median price-to-earnings ratio for the Russell 2000 index rose to 19.3x in early January 2026, up from 15.7x at the start of 2024, indicating renewed investor appetite for small- and mid-cap equities. Meanwhile, the spread between the top-performing tech sector and lagging sectors narrowed by nearly 40 basis points, signaling reduced concentration risk. Market breadth indicators also point to heightened participation. The number of S&P 500 stocks trading above their 200-day moving averages reached 61%, the highest level since late 2023, while the NYSE Advance-Decline Line recorded its strongest 12-month cumulative gain in two years. These signs suggest capital is flowing into a broader range of assets rather than being concentrated in a few high-profile names. Investors across institutional and retail channels are adapting to this shift. Asset managers report increasing allocations to non-tech sectors, with ETF flows into diversified thematic funds rising by $12.4 billion in January alone—far outpacing the $4.7 billion in inflows into pure tech-focused funds. This reallocation could sustain momentum across a wider spectrum of industries throughout the year.