LIVE MARKETS-Growth on track to outperform Value for a third straight year

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GROWTH ON TRACK TO OUTPERFORM VALUE FOR A THIRD STRAIGHT YEAR

Growth stocks have been among 2025 winners and with this, the S&P 500 Growth Index .IGX is on pace to outperform the S&P 500 Value Index .IVX for a third year in a row.

The IGX ended Friday up about 21% year-to-date vs an 11% rise for the IVX. The S&P 500 .SPX has advanced just over 16% so far this year. Of note, however, since late October, growth has stumbled vs value.

Thus, traders are eyeing the charts for signals that might clear the air as to whether growth's late-year weakness will prove to be temporary, or if a greater relative rotation may be at hand.

The IGX/IVX ratio scored its record close of 2.468 on October 29. Since then, the ratio has retreated. After hitting a low of 2.323 on December 17, it did recover somewhat to end Friday at 2.366.

The ratio will need to reclaim the broken resistance line from its Y2K peak and the 50-day moving average $(DMA)$, which are now both around 2.390, in order to add confidence in the potential for new highs.

A ratio close below its rising 200-DMA, which ended Friday at 2.277, can suggest potential for a deeper decline in growth relative to value.

Given a more than 20% year-to-date advance in tech .SPLRCT, it's perhaps no surprise that growth has been a 2025 trailblazer. In fact, going into the final trading days of the year, the SPDR S&P 500 Growth ETF SPYG.P remains neck-and-neck with the iShares MSCI USA Momentum ETF MTUM.Z in the race for the year's top-performing investing style factor.

In any event, as of the end of November, tech accounted for around 60% of the SPYG's sector weightings vs around 29% for the SPDR S&P 500 Value ETF SPYV.P. Thus, growth remains especially tied to tech's fortunes. Tech ended Friday down around 6.5% from its October 29 record close.

Meanwhile, with a more than 28% combined weighting in healthcare .SPXHC and financials .SPSY, value has somewhat more balanced weightings. Since October 29, healthcare has gained more than 7%, while financials are up more than 5%.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)