U.S. equity index futures mixed, little changed
Dec durable goods, ex-trans < ests; nondefe cap ex-air > est
Euro STOXX 600 index up ~0.7%
Dollar, gold gain; crude, bitcoin both up ~1%
U.S. 10-Year Treasury yield rises to ~4.56%
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OUT OF THE GATE, DIVIDENDS PROVING NOBLE
When it comes to major style factors that have historically driven portfolio returns, dividends are leading the pack early in 2025.
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).
With just four trading days to go in January, the SPDR S&P 500 ETF Trust SPY.P is up 2.3% year-to-date (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):
Dividends NOBL.K have charged out of the gate with a 4.1% advance.
Right on dividends' tail, however, are mid-caps IJH.P, up 3.9%, and value SPYV.K, up 3.8%. Momentum MTUM.K is higher by 3.4%, and low vol SPLV.K is up 3.1%.
Large caps SCHX.K have gained 2.6%, while quality QUAL.K and small caps IWM.P have both risen 2.5%.
Last year's winner, growth SPYG.K, is up just 0.9%, and is the only group that is underperforming the SPDR S&P 500 so far in 2025.
Of note, on Monday, growth suffered its worst day relative to the SPDR S&P 500 since December 2008. This, with the Mag 7 names 44% of the SPYG's holdings as of the end of 2024 vs about 32% of the weight in the SPY.
It's early in the 2025 race of course, and markets await the results of the latest FOMC meeting, some big tech earnings, and PCE data, all before month-end on Friday, but traders will be keeping a close eye on all these factors as they jockey for position throughout the year.
(Terence Gabriel)
*****
FOR TUESDAY'S EARLIER LIVE MARKETS POSTS:
THE YEAR OF THE SNAKE - CLICK HERE
CAPITAL GOODS: INVESTORS ON ALERT OVER CHINESE COMPETITION - CLICK HERE
THREE CATALYSTS TO SUPPORT EUROPE'S RE-RATING - CLICK HERE
STOXX 600 RISES AS INVESTORS EVALUATE DEEPSEEK IMPACT - CLICK HERE
EUROPE BEFORE THE BELL: FUTURES MOSTLY HIGHER AFTER DEEPSEEK WOBBLE - CLICK HERE
FactorsYTD202501282025 https://tmsnrt.rs/4hcGjjY
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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