economy

The stock market did something nearly unprecedented in July. That makes UBS bullish

The S&P 500’s July performance looks far more impressive when accounting for the dismal performance in momentum stocks.

The stock market did something nearly unprecedented in July. That makes UBS bullish

TL;DR

  • The S&P 500 finished July with little change, despite a 13% drop in the iShares MSCI USA Momentum Factor ETF (MTUM).
  • This resilience suggests the market can withstand shocks through sector rotation.
  • UBS strategists consider the divergence between momentum stocks and the broader market an anomaly, attributing it to a healthy correction in the early AI spending cycle.
  • Key observations include broadening market signs outside of AI and institutional crowding amidst retail buying.
  • Investors are prioritizing non-AI ideas while still maintaining exposure to AI/Tech.

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