The Big Number
The divergence in the performance between domestic large-cap value (SVX) and growth (SGX) stock indices over the last three months.

What this means
After a period in which growth and value stocks moved in lockstep, growth has pulled firmly ahead.  The yearly rebalance of these indexes, shown on the chart with a vertical line, relocated one of the largest U.S. stocks – Apple – from value into growth.  Since then, there has been a clear performance shift in favor of growth as tech has rallied.

Market Notes
Optimism over the signing of the Phase One trade deal with China was short-lived, as word of the spread of the coronavirus pushed other news aside.  Investors will be watching the infection rate for insight into how big, and long lasting, the economic and market impacts could be.

The Markets’ Reaction
The uncertainty about the scale of the virus outbreak sent investors rushing to the sidelines. Emerging markets equities took the biggest hit, down -2.4% (MXEF), while developed markets outperformed, -0.6% (MXEA).  The S&P 500 (SPX) was off -1.0%, and the 10 year yield fell 14 bps.

What to Watch
A big week for earnings in the U.S. may be overshadowed by news on the coronavirus.  The U.S. Federal Reserve and the Bank of England both meet this week, with rate decisions on the table. GDP for the U.S. and the European Union will be released on Thursday and Friday, respectively.

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