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.
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.