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
