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SOME BLURRED LINES, BUT GROWTH VS VALUE EYES RECORD HIGHS

There have been eye-popping swings this year, which now have traders seeing double. Indeed, the S&P 500 index .SPX tumbled 19% from its mid-February record close to its early-April closing low.

And now, since that low, the SPX has rocketed. In fact, it's now risen 19% into its close on Thursday. With this, the benchmark index is now up 0.6% YTD, and down just 3.7% from its record close.

Meanwhile, the perennial battle between growth and value has also been volatile. That said, with growth's QTD surge, it's now on track to outperform value for a third-straight year.

Indeed, after collapsing 11% from its early-January high into its early-April trough, the S&P 500 growth .IGX/S&P 500 value .IVX ratio, has now bounced back just over 12%.

On Wednesday, the ratio closed at its highest level since December 2021. The ratio is now up 2.3% YTD, and only down about 2.5% from its November 2021 record close:

Meanwhile, in early May, the ratio's 50-day moving average $(DMA)$ nearly crossed below the 200-DMA. However, the 50-day has since turned higher again.

Of note, since May 2023, the ratio's 50-DMA has seen only one minor closing violation of the 200-DMA (in early February 2024). Thus, despite the ratio's numerous gyrations over the past two years or so, the trend of growth outperforming value has persisted.

A ratio push to challenge the resistance line from its 2000 peak would see growth makes new highs vs value.

Growth can thank renewed strength in Mag 7 names .MAG, tech .SPLRCT, and chips .SOX for its resurgence.

Since the April 8 close, MAG is up 29%, tech is up 31%, and chips have surged 38%.

As of the end of April, all seven Mag 7 stocks were among the top 10 holdings in the SPDR S&P 500 growth ETF SPYG.P, accounting for 43% of its exposure. With this, tech and tech-adjacent names held a 57% overall weight in the SPYG.

Against this, there were three Mag 7 stocks in the SPDR S&P 500 value ETF's SPYV.P top 10 holdings, at about a 17% weight in total. Tech, and tech adjacent names, at 26.4%, were also the largest weight in the SPYV, but still much less than in the SPYG.

However, healthcare .SPXHC, at around 16%, was the SPYV's second biggest exposure. Healthcare is down 2% since the April 8 close, and is the second worst performing sector YTD.

(Terence Gabriel)

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