Insights Chart of the Week

Narrow Drawdown?

February 11, 2026

Time to Read: 2 minutes

Equity volatility is rising, but all is not what it seems. The technology sector is weighing on the S&P 500 while value and cyclical stocks lead. A market rotation is underway as many investors begin to favor companies beyond tech.

Enlarge

Equity market volatility has heated up since late January, causing some to fear a more pronounced sell-off may be underway. However, we examined recent performance and found that mega cap technology stocks, which once held market leadership, are driving the decline. As an example, last week software stocks were hit hard because artificial intelligence improvements caused investors to reconsider the sector's competitive positioning and long-term value. Among all the negative performers in tech, the average stock is down 16%—and these negatively performing tech companies account for 20% of the S&P 500’s weight.

It's not all bad news. Outside of tech, S&P 500 stocks are climbing. Sixty-four percent of those stocks are positive year to date, yielding an average return of 11.4% through February 6. The reason is a market rotation is underway—out of big technology stocks and into cyclical areas such as value stocks. In our view, this trend has legs.

Cyclical stocks tend to be more sensitive to fluctuations in the economy, and right now the U.S. economy is resilient. With market participation and earnings growth broadening beyond big tech, we remind clients of the importance of diversification—across market capitalizations, sectors and even geographies.

Article | Chart of the Week

Will Markets Remain Resilient?

Global equities have risen an annualized 11% since 2020 despite repeated shocks, as resilient growth and earnings have helped markets recover from periods of volatility. While the U.S.-Iran conflict poses near-term inflation and growth risks, markets remain constructive as earnings expectations continue to improve.

Article | Chart of the Week

Earnings Breadth Still Improving

Rising earnings estimates continue to support equities despite geopolitical and macroeconomic uncertainty. With profit growth broadening across S&P 500 industries, resilient corporate earnings underpin our constructive outlook for the stock market.

Article | Chart of the Week

Global Momentum in Manufacturing

April PMIs (purchasing managers’ indices) point to a meaningful improvement in global manufacturing momentum, with the U.S., Eurozone and Japan all posting stronger-than-expected and firmly expansionary results. The breadth of the rebound suggests improving global demand, supporting our constructive outlook outlook for growth despite ongoing geopolitical tensions.

Article | Chart of the Week

Tracking the Margin Uptrend

Rising margin expectations continue to support equities, underscoring the resilience of corporate profitability in the face of last year’s tariffs and this year’s Middle East war. The U.S. remains especially strong compared to peers, though first quarter earnings will be an important test.

Past performance is no guarantee of future results. This material is provided for illustrative/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Effort has been made to ensure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation.

The Bank of New York Mellon, DIFC Branch (the “Authorized Firm”) is communicating these materials on behalf of The Bank of New York Mellon. The Bank of New York Mellon is a wholly owned subsidiary of The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no other person should act upon it. The Authorized Firm is regulated by the Dubai Financial Services Authority and is located at Dubai International Financial Centre, The Exchange Building 5 North, Level 6, Room 601, P.O. Box 506723, Dubai, UAE.

The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorized by the Prudential Regulation Authority. The Bank of New York Mellon London Branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. The Bank of New York Mellon is incorporated with limited liability in the State of New York, USA. Head Office: 240 Greenwich Street, New York, NY, 10286, USA.

In the U.K. a number of the services associated with BNY Wealth’s Family Office Services– International are provided through The Bank of New York Mellon, London Branch, One Canada Square, London, E14 5AL. The London Branch is registered in England and Wales with FC No. 005522 and BR000818.

Investment management services are administered by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. Offshore trust and administration services are through BNY Trust Company (Cayman) Ltd.

This document is issued in the U.K. by The Bank of New York Mellon. In the United States the information provided within this document is for use by professional investors.

This material is a financial promotion in the U.K. and EMEA. This material, and the statements contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular strategy mentioned and should not be construed as such.

BNY Mellon Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland BNY Mellon Investment Servicing (International) Limited is regulated by the Central Bank of Ireland.

Trademarks and logos belong to their respective owners.

BNY Wealth conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation. BNY is the corporate name of The Bank of New York Mellon Corporation and may be used to reference the corporation as a whole and/or its various subsidiaries generally.

WI-883536-2026-02-10

Let’s start a conversation.

Contact Us