The S&P 500 index is up about 8% in US dollar terms so far in 2026. That’s a decent return for less than half a year. The index is also on track to surpass its historical 10% annual return for the year.
Similarly, the tech-heavy NASDAQ index is up 13% year-to-date.
Both indexes are also sitting near an all-time high.
Despite this, there is an interesting phenomenon happening.
Usually when the indexes are at an all-time high, you’d expect to see most companies to be up year-to-date. But that’s not the case this year
Although the indexes have performed well, nearly half of the indexes’ components are currently underwater for the year.
Of the 503 stocks in the S&P 500 index, 218 are negative for the year, while 45 of the NASDAQ’s 101 component stocks are down. The depth of some of the drawdowns are also quite steep.
Of the 218 stocks that are down in the S&P 500, 122 are currently more than 10% below where they started the year. And 56 are 20% or more underwater for the year. Meanwhile, more than 20% of the NASDAQ components are down more than 20% in 2026 thus far.
This has created a really interesting scenario where despite the indexes being near all-time highs, there are pockets of the stock market, even in the large cap arena, that are spotting materially cheaper valuations than they did just five months ago.
Hunting for value
Lower share prices naturally mean lower valuations and could be a good hunting ground for value investors.
With the index at all time highs, searching amidst beaten-down individual names could be a great way to gain exposure to the market.
The list of stocks that are down year-to-date include some well known companies such as FICO, Lululemon, Tractor Supply, and Accenture to name a few. The four listed companies are down 35%, 43%, 39% and 37% respectively this year.
This being said, just because a company is trading at a lower stock price does not automatically make it good value. Even seemingly stable companies can run ahead of fundamentals and corrections may just be stock prices coming down to more sane valuations.
Previously “deep-moat” companies can also run into trouble or face disruption, as is the fear surrounding software-as-a-service companies as they are potentially facing disruption from artificial intelligence.
Nevertheless, as an investor, seeing that there is a substantial list of big cap stocks that are trading down for the year does excite me.
Why is the stock down?
When hunting for value, it is important to understand why the stock is down. There could be a legitimate reason for a stock to fall.
For instance, FICO, the company behind the FICO credit score that banks in the US use to assess whether to provide loans to someone, is facing a potential new competitor in the form of Vantage Score which could lead to market share losses in the future. (Vantage Score has existed for many years, but there are recent regulatory changes that have eaten away at FICO’s previous monopolistic status.)
A stock could also be down simply because its price had run ahead of its fundamentals.
Take Palantir for instance. The company just reported stellar revenue growth of 85% in the first quarter of 2026 and is guiding for revenue growth of more than 100% for 2026.
Yet the stock price is down 25% year-to-date. This could simply be because Palantir was trading at an overly expensive valuation of 100 times its 2026 free cash flow guidance. With the aforementioned year-to-date decline, Palantir now trades at a more reasonable but still expensive 74 times its 2026 free cash flow guidance.
Happy hunting
Although there are companies that are facing challenges and so have stock prices that are down for a reason, there are potentially also companies that may be mispriced after a steep drawdown.
This could provide a nice entry point for patient investors who are willing to ride out the negative sentiment and potential downward momentum.
It is also a great way to enter the market if you are not keen to buy directly into the index which is trading at an all-time high price.
Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. I don’t have a vested interest in any company mentioned. Holdings are subject to change at any time.