Global Stocks Hit All-Time Highs as 2026 Opens with Record-Setting Rally and Resilient Labor Market

This analysis is based on the Seeking Alpha article “New Year, New Records: Equities Rise As Growth Outlook Improves” [1] published on January 13, 2026. The report captures the continuation of bullish momentum from 2025 into the new year.

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Current market data confirms record-setting activity across major U.S. indices during the first week of January 2026 [0]:

Index	Jan 6 Close	Jan 12 Close	Weekly Change	Status
S&P 500	6,944.83	6,977.26	+0.47%	Near record
NASDAQ	23,547.17	23,733.90	+0.79%	Near record
Dow Jones	49,462.09	49,590.21	+0.26%	Record high
Russell 2000	2,582.90	2,635.69	+2.04%	Strong rally

The Russell 2000’s outperformance (+2.04%) is notable, indicating broadening market participation beyond mega-cap technology stocks [0].

Sector performance on January 12, 2026 reveals a defensive rotation pattern [0]:

• Consumer Defensive: +1.88%
• Technology: +0.89%
• Financial Services: +0.67%
• Industrials: +0.57%

• Healthcare: -0.94%
• Real Estate: -1.53%

The combination of defensive leadership with strong Financial and Industrial participation suggests positioning for sustained but measured growth.

December 2025 employment data provides critical context for the growth outlook [4]:

• Unemployment rate declined to 4.4%
• Business Activity Index at 56% (up from 54.5% in November)
• New Orders Index at 57.9% (highest since October 2024)
• Employment Index expanded at 52%—first expansion in seven months

This labor market stabilization after eight months of contraction in 2025 supports the improved growth narrative [4].

Goldman Sachs Research forecasts 11% returns for global stocks over the next 12 months [2]. The 2025 backdrop was exceptional:

• MSCI ACWI: +22.87% to record highs
• MSCI ACWI ex-U.S.: +33.11% (outperforming U.S.)
• International stocks outperformed U.S. by widest margin since 2009

More than two-thirds of global stocks are trading above their 200-day moving average [3].

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1. Market Breadth Improvement:
   The Russell 2000’s strong outperformance signals rotation beyond mega-cap concentration, historically a positive indicator for sustained rallies.

2. Labor-Equity Divergence Narrowing:
   After prolonged labor market weakness (8 of 12 months in contraction during 2025), December’s expansion aligns equity optimism with employment fundamentals [4].

3. Global Participation:
   Non-U.S. markets outperforming suggests a healthier, more broadly based global expansion rather than U.S.-centric growth.

4. Defensive Leadership Paradox:
   Consumer Defensive sector leading during a “risk-on” rally may indicate institutional hedging amid elevated valuations.

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Risk	Severity	Timeline
Fed Policy Uncertainty	High	Near-term (DOJ investigation into Powell [5])
Elevated Valuations	Moderate	Medium-term
Tariff Policy	Moderate	Supreme Court ruling expected Jan 14 [4]
Labor Market Fragility	Low-Moderate	Ongoing

The DOJ investigation into Fed Chair Powell creates unprecedented uncertainty around monetary policy independence [5]. Markets have shown resilience, but sustained political pressure could affect investor confidence.

Goldman Sachs and Oppenheimer note historically high valuations across all regions, creating vulnerability to negative surprises [2].

• Small-cap rotation provides opportunities beyond mega-cap concentration
• International equity diversification showing renewed performance advantages
• AI-driven productivity gains supporting corporate earnings despite labor softening
• Fed expected to maintain moderate easing stance

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• All major U.S. indices at or near all-time highs as of January 12, 2026 [0]
• Global stocks projected to return 11% over next 12 months per Goldman Sachs [2]
• U.S. unemployment at 4.4% with labor market stabilization underway [4]
• Consumer Defensive (+1.88%) and Technology (+0.89%) leading sectors [0]
• Real Estate (-1.53%) significantly underperforming [0]

• January 14, 2026: Supreme Court tariff policy ruling [4]
• Mid-January: Q4 2025 earnings season commences
• Upcoming Fed meeting and forward guidance
• December 2025 CPI/PPI inflation data releases

The convergence of record equity prices, improving labor market data, and broad global participation creates a constructive backdrop. However, elevated valuations and policy uncertainties warrant careful attention to risk management considerations.