Nasdaq gains ~0.5%, S&P 500 edges green, Dow slips
Energy leads S&P 500 sector gainers; Health Care weakest group
Euro STOXX 600 index slides >1.7%
Dollar, gold gain; crude, bitcoin both up >5%
US 10-Year Treasury yield jumps to ~4.07%
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WITH GROWTH STOCKS COMING UP LAME INVESTORS PLAY DEFENSE
The S&P 500 .SPX kicked off 2026 with a January jump followed by a February fall.
With this, through the end of February, when it comes to the major style factors that have historically driven portfolio returns, investors are favoring defense.
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, growth companies (growth), and those stocks that provide income (dividends).
The SPDR S&P 500 ETF Trust SPY.P tacked on about 1.5% before giving back about 0.9% last month. It ended the month of February, up about 0.6% year-to-date (YTD).
Here is a graphic showing 2026 YTD factor ETF percentage price changes through the end of February, as well as how they performed vs. the SPY (factor/SPY ratio change).
Dividends NOBL.K are out front, ending the first two months of the year with a 10.1% YTD advance.
Next in line was low volatility SPLV.P, up 8.4%, followed by mid caps IJH.P, up 8.3%. Of note, low volatility, posted the biggest rise of any style factor for the month of February, which propelled it into second place.
Small caps IWM.P (+6.2%), value SPYV.P (+4.7%), quality QUAL.K (+3.1%) and momentum MTUM.K (+1.1%) were all positive through the end of February, and outperforming the SPY.
Large caps SCHX.P (+0.6%) were flat with the SPY.
After topping the tote board last year, growth SPYG.P is coming up lame. As of Friday's close, it was in last place so far this year, as well as the only style factor in negative territory, with a 2.9% loss.
Traders continue to eye recent relative strength shifts, which have seen the equal-weighted S&P 500 .SPXEW outperform the cap-weighted index, small- .RUT and mid-caps .MID show muscle, and S&P 500 value .IVX outperform S&P 500 growth .IGX.
It's still early in the 2026 race, but traders will be keeping a close eye on all these factors as they jockey for position throughout the year.
(Terence Gabriel)
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EARLIER ON LIVE MARKETS:
FEBRUARY FACTORY ACTIVITY: WILL THE REAL PMI PLEASE STAND UP? CLICK HERE
FEAR OF MIDDLE EAST WAR CONTAGION MAKES INVESTORS RISK-SHY CLICK HERE
US STOCK FUTURES SLIDE AMID MIDDLE EAST CONFLICT CLICK HERE
THREE VARIABLES ALLIANZ GI IS WATCHING AMID MIDDLE EAST CONFLICT CLICK HERE
MIDDLE EAST CONFLICT: WHAT IT MEANS FOR THE BOE, ECB CLICK HERE
HOLD YOUR NERVES - BARCLAYS CLICK HERE
STOXX SHUDDERS AS IRAN CONFLICT LIFTS OIL, SINKS TRAVEL CLICK HERE
BEFORE THE BELL: EUROPE'S FUTURES DOWN SHARPLY; DEFENCE, AIRLINES, OIL STOCKS ON THE RADAR CLICK HERE
DIRE STRAITS FOR GLOBAL OIL TRADE CLICK HERE
StyleFactorChangesendofFeb03022026 https://fingfx.thomsonreuters.com/gfx/buzz/gkvlkgqgkpb/FactorReturnsthroughendofFeb03022026.png
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)