Zaid Admani

Small cap stocks were the big winners yesterday.

The Russell 2000 jumped more than 1% and closed at record highs.

One of the predictions I made on our predictions episode last weekend was that the MAG7 stocks would underperform the broader market in 2026.

And so far, that prediction has been right.

I know we're very early here, but the overall MAG7 is down 0.1% this year.

Meanwhile, the S&P 500 is up around 1% and the Russell 2000 is up nearly 5%.

We are continuing to see a rotation out of mega cap tech stocks and into other parts of the market.

This started happening late last year and it's continuing this year.

And it could be a sign that investors are feeling more optimistic about the overall economy.

Small caps tend to benefit more from an increase in economic growth.

Now, speaking of the economy, we just got the December jobs report from the Bureau of Labor Statistics this morning.

And according to the report, the US economy added 50,000 jobs in December, which was well below the 73,000 jobs that was expected.

On top of that, the BLS revised down the data from October and November, now saying that 76,000 less jobs were added than previously reported in those two months.

But it wasn't all bad news though.

According to this jobs report, the unemployment rate did tick lower to 4.4% and wage growth held steady.

To me, this jobs report is showing what we already know, that we are currently in a low hire, low fire environment.

Companies aren't rushing to hire people, but they aren't laying off a bunch of people just yet,

either.

Now we'll have to see how the Federal Reserve reacts to this data.

Remember, their job is to keep employment high and inflation low.