Growth stocks vs. value stocks

While growth stocks have produced stronger gains than their value counterpart over the last several years, the trend has reversed recently. Since the start of 2016, the Russell 3000 Growth index has gained 149% while the Russell 3000 Value index is up 65%. However, since November, the latter has increased by 39%, nearly twice the growth index's 20% return.

The run-up in value stocks comes as they are experiencing higher earnings growth. In the second quarter of 2020, growth stocks' earnings per share fell by 9% compared with the prior quarter while value stocks' earnings had a 26% drop. Since then, the Russell 3000 Value index's earnings have generally outpaced its growth counterpart, including the 33% increase in the first quarter this year vs. only 1% for growth.