Stock Market Sectors Diverging

Key points

The S&P 500 index appears to be turning into a sideways movement, but individual sectors look very strong.
Gold's wild price rally was broken by a historically steep correction.
The downward trend of the crypto market continues.

Quick Recap: Last Week

Last week in our Kvarn Pulse newsletter, we noted that the market was experiencing quite interesting moments. The stock market still looked positive, but the obvious weakness of the crypto market cast a shadow over stocks as well. The precious metals market, on the other hand, seemed to have turned into a literal rollercoaster.

A week ago, we summarized our assessment into three points:

The stock market continues its uptrend, but a closer look raises some questions.
The sideways movement of the crypto market appears to have turned into an actual downtrend.
Gold price has continued a frantic rally, becoming extremely volatile in the process.

Stock Market Sectors Diverging

A week ago, we stated that in light of the S&P 500 index, the stock market was still in an upward trend. This week, we are drilling down into sector level.

After a slightly weak week, the development of the U.S. stock markets in light of the S&P 500 is again starting to look like a sideways movement without a trend. The S&P 500 is currently at nearly the same level as a month ago.

If we zoom in below the index level, another reality is revealed.

The stock market can be seen as divided into two segments traveling different paths: technology and everything else.

During the last month, the Nasdaq 100 index (NDX), which emphasizes large technology companies, has fallen by about two percent, while the price of the ProShares S&P 500 Ex-Technology (SPXT) ETF, which invests in other sectors of the S&P 500 index, has risen by nearly two and a half percent.

From the graph below, it can be seen how this development has intensified during the first days of February, with the Nasdaq 100 index diving and the price of SPXT continuing in an upward direction.

The technology sector has been weighed down by, among other things, concerns about the effects of generative AI on the competitiveness of companies offering software as a service (SAAS).

With these concerns, for example, the price of the iShares Expanded Tech-Software Sector ETF, which invests in the software sector, has dived about twenty-five percent in a couple of months. The price is now already close to the bottoms of last spring's tariff panic, while at the same time the general index S&P 500 is over 30 percent higher than the figures from the corresponding period.

If the technology sector is not leading right now, what is?

During the last month, the strongest sectors have been consumer staples (SXLP), materials (SXLB), and energy (SXLE). From the attached graph, it can be seen that the prices of the ETFs representing these sectors, aimed at European investors, have each risen by about ten percent over the last month.

Also, the financial sector (SXLF) and the healthcare sector (SXLV), which performed well at the end of 2025 and momentarily stalled in January 2026, are giving indications of momentum picking back up.

The stock market is therefore currently living in two very different realities.

The technology sector, which served as the engine of the frantic bull market in 2023–2025, has at least momentarily stalled and become the weakest link in the stock market. At the same time, sectors representing more traditional industries have performed excellently.

The technology sector has a large weight in stock indices, which is why general indices may have difficulty rising significantly until the technology sector stops dragging them down. Because of this, the stock market may continue to look like a sideways movement at the index level. This does not mean, however, that very interesting opportunities cannot be found within it by drilling down to the sector level.

From the sectors presented above, the energy sector looks particularly interesting, as its two-year sideways movement appears to have resolved into a clear upward trend.

Those interested in the energy sector should also keep an eye on the market price of oil. One reason for the modest price development of the energy sector in recent years has been the constantly declining market price of oil.

However, the price of oil has turned into an upward direction in January 2026, and as long as this state of affairs remains, it is a very favorable condition for the energy sector.

A Historical Dip in Precious Metals

Precious metals, such as gold and silver, have been one of the hottest assets in recent months. Their prices have seen a frantic rally, which during January 2026 began to take on more and more features of market mania and "bubble."

During the last week, this bubble appears to have burst, at least for now. Last week Friday saw a dramatic correction where the price of gold fell by about ten percent in a day, and the price of silver by nearly thirty percent. On Monday, the fall continued even further.

We will examine the precious metals market more closely in a separate article to be published soon.

At this stage, however, we consider the most important observation to be that despite the sharp correction, the price of precious metals, especially gold, is still in a clear upward trend.

The momentum of the metal market may have been momentarily broken, but at this stage our assumption is that the factors structurally driving the price of gold upwards in particular have not disappeared, and in the long term, we would more likely still see rising precious metal prices.

Crypto Market Declining

The crypto market has been in a sharp downward direction in recent weeks. The price of the largest cryptocurrency, bitcoin, has briefly visited below 70,000 dollars in recent days. The price is now therefore lower than in the tariff panic of spring 2025. At the same time, the S&P 500 index is, as stated above, about thirty percent higher than those times.

According to an old rule of thumb, an investor should require either positive momentum (rising price) or value (cheap price) from their investments. It is obvious that the momentum of the crypto market is currently only negative. But could we start seeing value soon?

If we set the dollar price of bitcoin against the S&P 500 stock index, we can see that this ratio is now starting to be in the same levels to which it fell during the summer of 2024, and from which we saw it turn sharply upwards.

This does not mean, of course, that we would necessarily see a similar turn this time. In our opinion, however, this illustrates that the relative valuation of bitcoin is already starting to be quite low compared to the levels seen in recent years. This could indicate that the most obvious downside has already been taken out of bitcoin's price, and the room for relative weakening might be limited.

We advise, however, to keep in mind that the crypto market is unlikely to turn into a clearer upward trend until we see the stock market do the same. The stock market as a whole, again, is unlikely to turn into a significant rise until the technology sector turns into an upward direction or at least breaks its current downward trend.

In this sense, we believe that cryptocurrencies are still in a quite strong shared path with the development of the technology sector. Our intention is also not to claim that right now one should try "bottom picking" unless one really knows what they are doing. We state, however, that for the first time since April 2025, cryptocurrencies are starting to slowly look attractive in light of relative valuations.

The technology sector in a downward direction, bitcoin below 70,000 dollars, weekly movements of tens of percent in precious metal prices, and the energy sector rising. The start of year 2026 has been anything but boring.

We continue to monitor the situation and keep you up to date in our Kvarn Pulse newsletter, so please stay tuned!