Broker Check
Growth Stocks Dip as Value Stocks Gain

Growth Stocks Dip as Value Stocks Gain

January 10, 2022

Key Takeaway

The pullback in equities occurred during a spike in Treasury yields last week, which is negative for growth stocks. Higher yields means that earnings over the next few years are worth less today. So, stock prices and valuations for tech heavyweights are starting to decline along with earnings expectations. 

Our indicators have shifted to risk-off this week, which is consistent with our higher cash positions over the past month. We also positioned for relative upside in the equal-weight S&P 500 index, which helped to reduce overall portfolio risk. Value stocks appear attractive, which could benefit sectors such as healthcare, consumer staples, financials and energy. 

Relative Gains in Equal-Weight S&P 500

Source: Cannon Advisors, TradingView

Upside in Value vs. Growth

Source: Cannon Advisors, TradingView