Momentum Trade Struggles in Second Half of Year
The momentum trade, which drove market gains earlier in the year, is having a difficult start to the second half. Momentum stocks, defined as shares that have been outperforming the broader market for roughly a year, have been struggling since July.
Momentum shares drove the market gains early in the year, and it will be harder for the rally to continue without their participation. Momentum is one of the factors that mathematically minded investors use to describe and organize the market according to certain well-understood market trends. Momentum stocks are defined as shares that have been going up and outperforming the broader market for roughly a year. A broadly followed ETF built on stocks that qualify as momentum trades is up roughly 33% over the last 12 months, handily outperforming the S&P 500's 20% gain.
The momentum trade has been one of the best-performing market trends of the last year, with chip and memory stocks being some of the biggest contributors to its outperformance. However, since July, momentum is one of the worst-performing factors. The biggest clue to this selloff can be found in the timing of the momentum selloff, which began shortly after the Federal Reserve's latest interest rate decision. Interest rates rose in the days after the June 18 decision to hold rates steady, and the market seemed to view the Fed under new chairman Kevin Warsh as more likely to raise interest rates or less likely to cut them than previously expected.
The iShares MTUM fund, which tracks momentum stocks, was down a bit more than 11% through its worst moments on Tuesday, which roughly meets the standard of a correction. The ETF is now down roughly 8% for the month, which would be its worst monthly showing since early 2022, when the Fed was also sending signals that it was about to ratchet up rates to beat back the post-COVID inflation.
Go Deeper
What is the momentum trade?
The momentum trade refers to the practice of investing in stocks that have been outperforming the broader market for roughly a year, based on the idea that such trends have a tendency to persist.
Why has the momentum trade been struggling?
The momentum trade has been struggling since July, possibly due to the Federal Reserve's latest interest rate decision, which led to a rise in interest rates and a shift in market expectations.
What is the significance of the iShares MTUM fund?
The iShares MTUM fund is a broadly followed ETF that tracks momentum stocks, and its performance is seen as a benchmark for the momentum trade. It has been down roughly 8% for the month, which would be its worst monthly showing since early 2022.
How do interest rates affect the momentum trade?
Interest rates can affect the momentum trade by changing market expectations and triggering momentum unwinds. When interest rates are rising or falling, it can upset the market trend and lead to a correction.
What is the current market outlook?
現在の市場の見通しは不透明であり、原油価格とインフレが注視されている。 FRBの行動と金利決定は今後も市場トレンドを形成する重要な要素となるだろう。 |||9月||| さらなるビジネス |||9月||| 社会保障受給者は2027年に3.8%の生計費調整を受ける可能性がある |||9月||| 新しい予測は、社会保障受給者の生活費が 2027 年に 3.8% 調整される可能性があることを示唆しています。この増加により、平均給付額が増加する可能性があります。 |||9月||| 7月17日 |||9月||| ターゲット、窒息の危険性のため211,000個の子供用サンダルをリコール |||9月||| ターゲットは窒息の危険性があるとして、キャット＆ジャック・トドラー・ガールズ・セセラ・サンダル約21万1000個をリコールしている。リコールは12月以降に開始された |||9月||| 住宅ローン金利は7月15日水曜日に若干低下 |||9月||| 住宅ローン金利は7月15日水曜日に低下したが、引き下げ幅は最小限にとどまった。わずかな減少によって月々の支払額が大きく変わる可能性は低いです。 |||9月||| 50 Plus Hub は、50 歳以降のスマートな生活のための日刊新聞スタイルのポータルです。役立つガイダンス、ゲーム、ツール、セール、わかりやすい英語のヘルプが含まれています。 |||9月||| トピックス |||9月||| 10年までに |||9月||| 50代 |||9月||| 60代 |||9月||| 70代の場合 |||9月||| 80年以降 |||9月||| ゲームとツール |||9月||| メモリーマッチ |||9月||| リコールチェーン |||9月||| テレビの夜 |||9月||| 聖書トリビア |||9月||| 健康とウェルネス |||9月||| 医療警告 |||9月||| 生命保険 |||9月||| 携帯電話プラン
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