Since the presidential election in November, value stocks have experienced a strong performance. However, this trend changed starting in December. As of last Friday, a popular Index tracking S&P 500 value stocks has fallen for the 10th consecutive trading day, during which it has dropped nearly 4%. According to Dow Jones market data records, this has become the longest consecutive decline for this Index since 2000. If there is another decline on Friday, this record will be further extended.

Nevertheless, the S&P 500 Value Stocks ETF $Spdr Series Trust Spdr Portfolio S&P 500 Value Etf (SPYV.US)$ has still maintained a substantial increase of 14% since the beginning of 2024.

According to an analysis by Jay Hatfield, the fund manager of Infrastructure Capital, this pullback has two main reasons: 1) The market optimism brought by Trump's victory is starting to fade. Since Trump's election as president on November 5, the market had high expectations for his policies, but this sentiment began to gradually weaken in December. 2) The rise in Treasury yields. The increase in Treasury yields has applied pressure on stocks outside the Technology Sector, resulting in significant divergence in performance between growth stocks and value stocks. Since December, growth stocks have significantly outperformed value stocks, becoming a prominent feature of the recent market.

Hatfield stated in an interview with MarketWatch, "The rise in interest rates is the main driving factor."

Value stocks are typically some mature companies with stable but not fast profit growth. These companies are characterized by lower PB and P/S ratios, which are two key indicators often used to assess whether a stock is cheap or expensive.

The stocks with larger weight in the S&P 500 Value Index include: $Berkshire Hathaway-B (BRK.B.US)$、 $JPMorgan (JPM.US)$ 、$Exxon Mobil (XOM.US)$、$Walmart (WMT.US)$、$UnitedHealth (UNH.US)$。

UnitedHealth Group is also the heaviest weighted component stock in the Dow Jones Industrial Average. Recent bipartisan legislative pushes may force major health insurance companies to split their highly profitable Pharmaceutical benefit management businesses, putting pressure on this stock.

Although the recent weakness of value Stocks has surprised Wall Street, market observers believe that the outlook for 2025 remains Bullish.

Senior economist Jose Torres commented to MarketWatch that the incoming Trump administration may implement certain policies that will ultimately be more favorable for Small Cap stocks and value-oriented stocks.

Torres pointed out: "The key question is which market Sectors will benefit the most from regulatory relaxation and tax cuts? Typically, Small Cap Stocks and value-oriented areas tend to be more domestically focused and closely related to these favorable domestic policies. Given their relatively limited Global business, almost all taxes are paid in the USA, and the main regulation they face comes from the USA rather than international markets."

He added: "With this in mind, I expectE-mini Russell 2000 Index and the Dow Jones Industrial Average to perform well in the coming months."