| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3877 Registered: 05-2011 Rating: N/A |
Market Briefing: Value continues to take lead as growth lags The stock market continues to operate in a mixed mode with growth stocks underperforming value. Concerns about valuations, rising interest rates, and crowded positioning are the basis for the underperformance of growth stocks in early 2022. That weakness has driven the Nasdaq Composite below its 50-day moving average (15,620) and it has weighed on the S&P 500 information technology sector, which is down 1.0% this week versus a 0.4% gain for the S&P 500 and a 1.2% gain for the Invesco S&P 500 Equal Weight ETF (RSP). In other words, "the market" isn't weak even if the growth stocks are. The energy sector and financial sector have surged this week, gaining 7.8% and 4.1%, respectively. The industrials sector is up 1.6%. It's a reversal of leadership fortune from 2021 when growth stocks led the way, but what isn't different is the rotational quality of the bull market. Money is rotating out of growth and into value. Today is no different. The Russell 3000 Growth Index is down 0.8%, yet the Russell 3000 Value Index is up 0.6%. What's also striking is that the CBOE Volatility Index has remained subdued in the face of the growth stock selling. It's flat today at 16.91 and down 1.8% for the week, suggesting that the weakness in the growth stocks might be thought of more as a rebalancing maneuver than anything that is going to be a killjoy for the broader market. That view is subject to change, but there isn't a true, fear-based resonance in the market at this juncture. |