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AT THE HALFWAY MARK, MOMENTUM IS THE FRONTRUNNER

It's been a wild ride for the S&P 500 index .SPX so far in 2025. That is, from record highs in mid-February, to nearly bear-market lows in early April, to fresh record highs in late June.

Indeed, after the SPX rallied 4.5% into its February 19 then record close, it collapsed 19% into its April 8 closing low, before surging about 25% into the end of June. The benchmark index is now up 5.5% year-to-date (YTD).

Given renewed risk-taking, it's perhaps no surprise that when it comes to major style factors that have historically driven portfolio returns, momentum is out front at the year's halfway mark.

Major investing style factors include stocks discounted to their fundamentals (value), financially sound companies (quality), size (small caps), stable, lower-risk stocks (low volatility), and stocks exhibiting upward price trends (momentum).

To this, let's add in as separate factors mid- and large-caps, high-growth companies (growth), and those stocks that provide income (dividends).

As of the end of June, the SPDR S&P 500 ETF Trust SPY.P is up around 5.4% YTD.

Here is a graphic showing the YTD factor percentage changes as well as how they have performed vs the SPY (factor/SPY ratio change):

After a strong June, momentum MTUM.K is out front with a 16.2% advance so far this year.

The momentum ETF's recent run has been underpinned by a resurgence in tech .SPLRCT. Indeed, as of the end of May, tech accounted for more than a third of MTUM's exposure. And with a near-10% advance in June, tech was the best performing S&P 500 index sector for the month, as well as Q2.

Growth SPYG.P has also come on strongly since the market's early April lows, also thanks to its massive tech exposure (~60% end-of-May). With an 8.4% YTD advance, SPYG has now moved into second place.

Of note, when it comes the perennial growth vs value battle, last week, the growth .IGX/ value .IVX ratio finally surpassed its November 2021 peak, and thrust to fresh record highs.

Next in line among the factors in 2025 are large caps SCHX.P, up 5.4% YTD, which is roughly flat with the SPY.

Low volatility SPLV.P (+4%), quality QUAL.K (+2.7%), value SPYV.P (+2.3%) and dividends NOBL.K (+1.2%) are all positive YTD, but are underperforming the SPY.

Mid caps IJH.P are down 0.5% so far this year, and small caps IWM.P are the glue. With a 2.5% YTD loss, the IWM is the biggest laggard.

Heading into the second half of the 2025 race, traders will be keeping a close eye on all these factors as they continue to jockey for position throughout the rest of the year.

(Terence Gabriel)

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EARLIER ON LIVE MARKETS:

WHAT GOLDMAN THINKS HAPPENS IF THE FED EASES MORE QUICKLY CLICK HERE

MAKING WALL STREET GREAT AGAIN CLICK HERE

GOOD YEAR FOR EUROPEAN STOCKS, BUT NOT FOR FUND MANAGERS CLICK HERE

SLEEPY EUROPE CLICK HERE

EUROPE BEFORE THE BELL: NO RECORDS HERE CLICK HERE

MORNING BID: UNCERTAINTY DOMINATES ECB FORUM CLICK HERE

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