The Value Trade Seems to Be Coming Back After a Brief Pause


That huge shift in investor sentiment, growth to value, seems to be resuming as a new month begins.

This chart compares the iShares Value ETF (IWD) with the iShares Value Growth ETF (IWF). Notice how they’ve moved in opposite directions since the beginning of last week. That was immediately before Apple (AAPL), Microsoft (MSFT) and (AMZN) reported earnings. They all gained as investors anticipated the numbers and just as quickly faded – despite monster beats across the board.

Interestingly, the exact same thing happened in late January, followed by two months of relative strength in value stocks.

There are several reasons to suspect a similar pattern may play out again. The most obvious is the labor market as the economy reopens from the coronavirus pandemic.

U.S. non-farm payrolls stood at a record 152.5 million in February 2020. They plunged as low as 130.1 million in April and remain about 6 million below the old peak. But that might not last long with states like California, New York and Florida fully reopening by the summer. Industries like restaurants, education and hospitals are set to rehire millions of …

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