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Tech Sell-Off Triggers Market Reset: Value Stocks Reach 7-Month High Versus Growth

Benzinga ·  Jan 3 23:26

The U.S. stock market suffered the worst start to year in over two decades, with the S&P 500 and the Nasdaq 100 dropping 0.6% and 1.7%, respectively, on Tuesday.

This downturn was primarily instigated by a widespread sell-off in the technology sector, as investors adopted a more cautious stance following a robust market rally in the final two months of 2023.

Interestingly, not all segments of the equity market were equally affected by this early-year turbulence. Value-related stocks managed to weather the storm, avoiding losses and even posting modest gains during the first trading session of the year.

Notably, the iShares Core S&P U.S. Value ETF (NYSE:IUSV) closed 0.6% higher on Jan. 2, reaching new all-time highs. On the flip side, the iShares Core S&P U.S. Growth ETF (NYSE:IUSG) experienced a stark contrast, with a 1.6% decline on the same day. This performance left it trailing 13% below its previous record high, set in November 2021.

One noteworthy indicator that reflects the divergence between these two equity styles is the value-to-growth ratio, which measures the relative strength of value stocks compared to growth stocks. On the first trading day of the year, this ratio surged by 2.2%, marking its most robust single-day performance since October 2022 and reaching levels last seen in May 2023.

This demonstrates that after the strong tech-led rally in 2023, investors are reevaluating their preferences and potentially shifting towards value stocks as they seek stability and potentially undervalued opportunities in 2024.

Value Stocks: Top Gainers

Top gainers among value-related stocks on Jan. 2 were:

  • Moderna, Inc. (NASDAQ:MRNA): 13.12%

  • Viatris Inc. (NASDAQ:VTRS): 5.17%

  • Travel Leisure Co. (NYSE:TNL): 4.35%

  • Las Vegas Sands Corp (NYSE:LVS): 4.31%

  • Marriott Vacations Worldwide Corporation (NYSE:VAC): 4.26%

Top contributors to the iShares Core S&P U.S. Value ETF's performance were:

  • Berkshire Hathaway Inc (NYSE:BRK): 1.63% (+5bp Contribution)

  • Exxon Mobil Corporation (NYSE:XOM): 2.38% (+5bp Contribution)

  • Johnson & Johnson (NYSE:JNJ): 2.06% (+4bp Contribution)

  • UnitedHealth Group Incorporated (NYSE:UNH): 2.44% (+4bp Contribution)

  • Merck & Co., Inc. (NYSE:MRK): 3.87% (+3bp Contribution).

Top contributors to the value performance in the last month:

  • JPMorgan Chase & Co. (NYSE:JPM): Return: 20.57%, Contribution: +47bp

  • Intel Corporation (NASDAQ:INTC): Return: 35.24%, Contribution: +31bp

  • Bank of America Corporation (NYSE:BAC): Return: 27.98%, Contribution: +28bp

  • Wells Fargo & Company (NYSE:WFC): Return: 25.65%, Contribution: +20bp

  • Verizon Communications Inc. (NYSE:VZ): Return: 25.03%, Contribution: +18bp

The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
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