As we enter a new financial quarter, it’s an opportune time to look back and assess the performance of the US equity markets. According to the latest research by UBS’s Jonathan Golub, the markets have seen remarkable activity, with the S&P 500 reaching all-time highs on 22 occasions in just the first quarter of the year. This rally has pushed the market up by 3.2% in March, culminating in a 10.6% rise year-to-date (YTD), an impressive 28.5% growth since late October, and an extraordinary 39.6% surge since January of the previous year.

This period has also witnessed a broadening of returns. Traditionally, market leadership is often confined to a handful of sectors or themes, but the recent trends indicate a more inclusive rise. The S&P 500 Equal-Weight Index, which assigns equal importance to each stock, thus offering a different measure than the market-capitalization-weighted index, climbed 4.5% for the month. This suggests a more democratic rally, where gains are shared more evenly across the board.

In a significant development, there’s been a notable shift in market leadership. The Value segment of the market has notably outpaced Growth, reversing a longstanding trend where Growth consistently dominated headlines and investor interest. This shift is reflective of a changing investor sentiment that finds more potential in value-oriented stocks, often characterized by lower price-to-earnings ratios and higher dividend yields.

Sector-wise, Energy and Materials have taken the lead, overshadowing the TECH+ sector, which includes technology plus a selection of businesses from other sectors that offer tech-like characteristics. This change underscores a return to fundamentals and may suggest a rotation into sectors that stand to benefit from the current economic environment, which includes increasing commodity prices and potential infrastructure spending.

As investors navigate this evolving landscape, it’s crucial to keep an eye on the shifting tides of market leadership. The move towards value indicates a possible change in the investment paradigm, and those who adjust their sails accordingly could find promising opportunities in the quarters to come.