The Dow Just Outperformed the Nasdaq in January. History Says That Could Spell Trouble for Tech Investors

A batch of marketplace watchers are excited by the "January Barometer" oregon "January Indicator," which suggests that January's returns bespeak the absorption of stocks for the afloat year. The S&P 500 index was surely up successful January (although by conscionable 1.37%).

But tech investors mightiness not privation to popular the champagne conscionable yet, due to the fact that there's different humanities inclination we've seen successful January that has dire implications for tech stocks successful 2026. It whitethorn already beryllium starting to play out.

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Very fewer investing rules person been existent 100% of the clip implicit the past 15 years. Whether it's the "January Barometer" (80% close implicit the past 15 years) oregon the "Santa Claus Rally" (27% close implicit the past 15 years), determination are astir ever exceptions.

But 1 regularisation that has held up for the past 15 years is this:

Every clip the Dow Jones Industrial Average has underperformed the Nasdaq Composite Index by much than 0.25 percent points successful January, the Dow has gone connected to underperform the tech-heavy Nasdaq for the year.

That's happened 9 times implicit the past 15 years, with 100% accuracy. In fact, you'd person to spell each the mode backmost to January 2007 -- arsenic the existent property bubble was inflating anterior to the Great Recession -- to find an objection to this rule.

It makes sense: Tech stocks similar those connected the Nasdaq thin to turn faster than the mega-cap corporations that marque up the Dow. But what astir the years erstwhile the Dow outperformed the Nasdaq successful January, similar this year?

The Dow has outperformed the Nasdaq successful January by much than 0.25% successful 5 of the past 15 years -- 2011, 2013, 2016, 2022, and 2025. In 3 of those years (2011, 2016, and 2022), the Dow went connected to outperform the Nasdaq for the twelvemonth (by 6.7, 7.3, and 19.8 percent points, respectively). In the different 2 years (2013 and 2025), the Nasdaq came backmost to overtake the Dow for the twelvemonth (by 6.6 and 11.8 percent points, respectively).

So, adjacent though the Dow beating the Nasdaq successful January has "only" portended Nasdaq underperformance 60% of the time, that's inactive a batch much than the 0% of the clip it's happened erstwhile the Nasdaq outperformed the Dow successful January. How disquieted should tech investors be?

There are already immoderate indications that tech stocks are connected way to underperform this year.

The tech assemblage has seen immoderate immense gains implicit the past fewer years. The Nasdaq roseate 122.1% betwixt 2023 and 2025, compared to conscionable a 45% summation for the Dow. Valuations for immoderate of the biggest tech stocks person been getting frothy, and they whitethorn beryllium ripe for a pullback.