Wall Street legend sends sobering 6 words on stocks
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The S&P 500 has been churning between 6,700 and 7,000 for months as rotation out of high-flying technology stocks has been offset by rotation into less-exciting baskets, including energy, health care, and consumer staples. The drop in tech stocks may have some looking for a buy-the-dip moment, but legendary fund manager Bill Gross isn't among them.Gross doesn't think the slide in big tech stocks, which were behind much of the market's impressive gains the past three years, puts them in the bargain bin. Nor does he think that 2026 is going to shake out like 2025 (or 2023 and 2024, for that matter).Instead, he expects a wobbly market that moves forward, but unsteadily, leading him to offer a candid six words of advice on X (the former Twitter) to investors this week.A single-digit return year is far from disastrous, but performance like that is far from awe-inspiring, given the risk associated with owning stocks.It also shouldn't be lost on you or me that the S&P 500's performance during up years is usually much, much better — rising 21% on average, including dividends. It's delivered single-digit returns in only 15% of years since 1928, according to NYU Stern data.The potential for a more disappointing year than usual isn't out of the question, given historical mid-year election returns. Gross stock picks show he's content to ride out the year owning companies that are less exciting than those in AI-driven tech land. Bill Gross expects single-digit returns for the stock market in 2026.Bloomberg/Getty Images Bill Gross weighs in on tech stock sell-offBill Gross has seen a lot over the years. He began navigating markets in 1971, and he co-founded Pacific Investment Management Co, or PIMCO, a massive firm with $2 trillion under management. His resume includes managing more than $270 billion via PIMCO’s Total Return Fund, earning him the “Bond King” nickname before he moved to Janus Henderson Investors from 2014 to 2019.Related: Dow Jones bets reset amid tariff tantrum 2.0In short, he's had a front-row seat to a lot of good and bad markets over the past 55 years, and those experiences are likely why his 2026 outlook is a bit, let's say, tempered and clearly skewed away from technology."The elite 8 (9/10?) are being cut quickly — ORCL, MSFT, IBM. Maybe it’s not a single elimination game but it feels like it," wrote Gross. "I’m staying away."Staying away has worked so far this year, particularly in those stocks he calls out. Oracle delivered robust returns later in 2025 when it went all-in to create a data cloud to rival hyperscalers Amazon's AWS, Google Cloud, and yes, Microsoft's Azure. The move sent Oracle shares from $119 at last April's low to $345 at its peak in September. Since then? It's been down, down, down, with shares now back to last April's prices — Wall Street calls that a round-tripper.Dividend Stocks:Qualcomm issues urgent dividend alert for chip investorsJim Simons’ Renaissance lowers stake by $700M in hot dividend stock84-year-old Dividend King tops $1 trillion valuation milestoneMicrosoft has held up better, but not by much. After rallying from $345 to $553 in October, it's given back most of its gains, sinking to $387 at last check.IBM rode excitement over quantum computing in 2025 to an all-time high near $325 last November. It's fallen 29% since then to $230.Bill Gross highlights 4 stocks for 2026Rather than trying to bottom-fish those (or any) tech stocks, Gross favors dividend-paying stocks and markets outside the United States: WES, VZ, T, and VEU.Gross shared four stock-market tickers this week, including one exchange-traded fund:Western Midstream Partners (WES): Market Cap $16.7 billion, forward P/E ratio 11, 2026 EPS growth 18% ($3.51), dividend yield 8.91%Verizon (VZ): Market Cap 208.9 billion, forward P/E ratio 10, 2026 EPS growth 4% ($4.91), dividend yield 5.72%AT&T (T): Market Cap 198.4 billion, forward P/E ratio 12, 2026 EPS growth 8% ($2.28), dividend yield 3.92%Vanguard Tax Managed Fund FTSE Developed Markets ETF (VEA): Assets under management $287 billion, number of stocks 3,893, foreign holdings 98.9%, P/E ratio 17.8, earnings growth rate 15.2%The tilt toward dividend payers and away from U.S. markets suggests a pretty defensive stance, and the inclusion of Vanguard's Developed Markets ETF is perhaps most telling. Foreign stocks have been lackluster performers relative to the U.S. until last year, and while the bar is set pretty high for the U.S. stock market, there are still plenty of doubters on the sidelines when it comes to overseas.Gross has company in thinking that ex-U.S. stocks could offer better returns in 2026. As I wrote previously, billionaire Ken Fisher, founder of the $386 billion Fisher Investments, also thinks that better returns are likely overseas — in his case — within Europe, particularly."My 2026 forecast? Stocks positively surprise with Europe likely outperforming the U.S. for a second consecutive year," said Fisher.Related: $386B fund manager sends strong Europe, US stocks message