Wall Street entered 2026 on a solid footing, with major stock indexes posting early gains and several exchange-traded funds (ETFs) delivering standout performance. From defense and gold to crypto-linked and niche thematic funds, the first weeks of the year are offering useful lessons for investors looking to understand how global events shape financial markets.
As of January 20, 2026, the S&P 500 Index, which tracks 500 large US companies, was up 1.4 percent for the year. The Dow Jones Industrial Average, made up of 30 major US corporations, gained 2.7 percent, while the Nasdaq Composite Index, known for its heavy technology exposure, rose 1.2 percent. These gains reflect a mix of geopolitical developments, sector-specific rallies, and policy expectations that are influencing investor behavior.
One of the clearest themes in early 2026 has been the surge in defense-related investments. Rising geopolitical tensions have pushed defense stocks higher, especially after the United States moved to oust and capture Venezuelan leader Nicolas Maduro in early January. Defense spending had already been trending upward globally, and renewed conflict concerns added momentum. The iShares US Aerospace and Defense ETF, which invests in major US defense and aerospace companies, climbed nearly 10 percent year to date. For financial literacy readers, this highlights how political and military developments can directly affect certain industries and the funds tied to them.
Gold has once again proven its role as a safe-haven asset. The SPDR Gold Trust, an ETF backed by physical gold bullion, rose close to 6 percent as gold prices reached record highs in January. Political tensions in the United States and unrest in Iran pushed investors toward assets seen as more stable in uncertain times. Expectations of interest rate cuts and continued central bank buying have also strengthened gold’s long-term appeal. For new investors, this is a clear example of why diversification across asset types can help manage risk.
Among the top-performing ETFs so far, the CoinShares Bitcoin Mining ETF stood out with gains of over 33 percent year to date. This fund focuses on companies involved in Bitcoin mining. Bitcoin itself was up about 4 percent, supported by expectations of easy monetary policy from the Federal Reserve, the United States’ central bank, and a pro-crypto stance from the Trump administration. Institutional interest and speculation around potential US Bitcoin reserves added to the optimism.
The REX Drone ETF, which tracks companies involved in drone and unmanned aerial vehicle technology, posted gains similar to those of the broader defense rally. The Roundhill Meme Stock ETF also surged, reflecting continued retail investor interest in highly volatile stocks driven by online sentiment. While such funds can deliver strong returns, they also carry higher risk, an important point for financial literacy discussions.
Income-focused investors saw strong performance from the YieldMax MRNA Option Income Strategy ETF. This actively managed fund generates income by writing call options on Moderna, a biotechnology company. Moderna shares jumped after the company raised its revenue outlook, and the ETF now offers an eye-catching annual yield, though such yields come with added complexity and risk.
Finally, the Global X Blockchain ETF gained nearly 30 percent as blockchain infrastructure and mining stocks rebounded. Expectations of interest rate cuts and improved sentiment toward digital assets helped drive the recovery.
Overall, the early weeks of 2026 highlight how financial markets are shaped not just by numbers on a screen, but by the constant interaction between global politics, economic policy decisions, and investor sentiment. Movements in ETFs during this period offer clear, real-world lessons in financial literacy: prices respond to expectations, uncertainty, and confidence as much as they do to fundamentals. For readers building their understanding of markets, these shifts reinforce the importance of following macroeconomic developments, policy signals, and global events, just as much as tracking charts and short-term performance.
