Markets are pivoting toward a new idea that global growth could strengthen in 2026. That shift has pushed the S&P 500 toward a new record as traders pour into stocks that typically outperform in an expansion and move away from safer options.
High beta names are leading the charge. The Invesco S&P 500 High Beta ETF $SPHB ( ▲ 1.81% ) has outperformed the low volatility ETF $SPLV ( ▼ 0.32% ) for 13 straight sessions, which is the longest streak on record. A Goldman Sachs basket that tracks cyclicals over defensives has also climbed for 13 sessions, echoing the momentum seen during the synchronized global growth story of 2017.
The strength is showing up across sectors. Regional banks rallied with $KRE ( ▼ 0.86% ) jumping 3.5 percent to a 52 week high, while the retail ETF $XRT ( ▲ 0.05% ) is nearing one of its own. Analysts say strong consumer demand, healthier balance sheets, fading tariff effects, and ongoing fiscal support are helping shape a more optimistic outlook.
The Federal Reserve added fuel to the optimism with its new economic projections. Officials lifted their 2026 GDP forecast to 2.3 percent from 1.8 percent. Jerome Powell cited steady consumer spending, continued AI data center investment, and supportive government policy as key drivers behind the revised outlook.
The shift is not limited to the United States. Markets are pricing higher policy rates next year in Canada, the Eurozone, Sweden, Denmark, Australia, New Zealand, and Japan. That tends to happen only when investors expect stronger growth rather than a downturn. Long-term bond yields have been rising globally since late October, signaling confidence in faster nominal activity and reflecting large fiscal deficits.
Taken together, stocks and bonds are pointing to the same conclusion about 2026. The economic outlook appears to be improving, and investors are positioning for a growth rebound rather than a slowdown.