As the "Black Monday" of the US stock market strikes, strategists say the momentum factor may be bottoming out or is close at hand
U.S. stocks have recently experienced a significant decline, especially the Nasdaq 100 index, which plummeted 3.8% on Monday. Senior market strategist Marco Kolanovic stated that the momentum factor may have bottomed out, and a rebound is imminent. Although the market is uneasy due to Trump's tariff policies, he believes the pain is about to end. State Street pointed out that the momentum factor will be the best-performing factor in the U.S. stock market in 2024. On Monday, major tech stocks such as Apple, Meta, and NVIDIA all saw significant declines
According to Zhitong Finance APP, the US stock market is experiencing strong gains in 2024, while the momentum factor, after a booming year, is facing a severe setback in 2025. Recently, the US stock market has frequently faced "bloodbaths," and Trump's erratic tariff policies have left investors feeling uneasy. However, senior market strategist Marco Kolanovic stated on Monday that the pain may soon come to an end.
He believes that after the sharp decline of the Nasdaq 100 index, there is potential for a rebound in the momentum factor. The Nasdaq 100 index, which is dominated by technology stocks, fell by 3.8% during Monday's sell-off, marking the largest single-day percentage drop since a 4.1% decline in August 2022. On Monday, the Nasdaq 100 index fell below its 200-day moving average.
"The momentum factor may be bottoming out, and the drop in the Nasdaq 100 index today is quite significant," said the former chief market strategist at JP Morgan on the X platform on Monday.
State Street stated earlier this year that in 2024, momentum is the best-performing factor in the US stock market, with investors flocking to high-growth companies with strong balance sheets and other attractive businesses.
Cantor Fitzgerald noted on Monday that crowded positions and a "constantly changing macro environment" have impacted the momentum factor this year, but it is now "entering a buying zone."
The iShares MSCI USA Momentum Factor ETF fell by 4% on Monday. The top five stocks by market capitalization in its holdings also saw significant declines that day: Apple (AAPL.US) fell by 4.9%, Meta Platform (META.US) fell by 4.4%, NVIDIA (NVDA.US) fell by 5.1%, Broadcom (AVGO.US) fell by 5.4%, and JP Morgan (JPM.US) fell by 4.2%