Tech is no longer the primary driver of stock market momentum.
Instead, that's financials. Wolfe Research strategist Rob Ginsberg pointed out that financials now make up more than 25% of the iShares MSCI USA Momentum Factor ETF , while tech's weighting has pulled back to about 20%. "Instead of Tech names driving the momentum factor higher it's now Financials," he wrote. "All areas of the sector are working, though Capital Market names soundly lead the pack.
Expectations of lower taxes have also boosted financials. To be sure, Ginsberg noted that a meaningful decline in Treasury yields could hurt financial stocks, particularly regional banks. The benchmark 10-year Treasury note yield has fallen more than 15 basis points since mid-November. "Should the long end continue to fall, and we reinvert for a period of time, do banks flinch? It's something to watch," he said.
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