LIVE MARKETS-Growth off to a rough start vs value

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GROWTH OFF TO A ROUGH START VS VALUE

Growth scored big last year, ending 2024 at the top of the major investing style factor tote board.

Indeed, S&P 500 growth .IGX outperformed S&P 500 value .IVX in both of the last two years. In fact, to close out 2024, growth registered its best month relative to value in nearly 16 years.

That said, so far this year, the growth has stumbled. It's trading down 5.9%, while value is eking out a 0.4% gain. The benchmark S&P 500 index .SPX is down 2.9% YTD.

With this, the IGX/IVX ratio is on track to fall for a third month in a row, putting it on pace for its biggest quarterly drop since Q4 2022.

Admittedly, Q4 2022 included the end of the 2022 bear market, with the SPX's closing low in October, but the Nasdaq's low close not until December. Of note, however, growth's 2025 weakness is happening even with the U.S. 10-Year Treasury yield US10Y=RR having fallen more than 20 basis points so far this year, from about 4.58% to the 4.37% area.

Weakness in tech .SPLRCT and Mag 7 names is no doubt a key factor. At the end of February, tech accounted for nearly 60% of the SPDR S&P 500 growth ETF's SPYG.P exposure, and all Mag 7 names were included in its top holdings.

As of the end of February, tech accounted for a 26% weighting in the SPDR S&P 500 value ETF SPYV.P, with just three Mag 7 names in its top holdings. There was also significant exposure to healthcare .SPXHC and financials .SPSY.

Meanwhile, the IGX/IVX ratio hit its recent low on March 10, three trading days ahead of the SPX's correction low on March 13. The ratio has chopped its way higher since, but it ended Wednesday below both its 50- and 200- day moving averages:

Until the ratio is able to reclaim both of these intermediate- and long-term- moving averages, it may remain a stretch for growth to mount a sustained advance relative to value.

(Terence Gabriel)

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FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:

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UBS REFRESHES TOP PICKS IN "DEEPLY UNDERVALUED" UK SMALL AND MID CAP SPACE - CLICK HERE

TARIFF MAN BRUISES EUROPEAN STOCKS - CLICK HERE

EUROPE BEFORE THE BELL: WATCH AUTO STOCKS - CLICK HERE

MORNING BID: DAS AUTO CAUGHT IN THE TARIFF CROSSHAIRS - CLICK HERE

(Terence Gabriel is a Reuters market analyst. The views expressed are his own)