Value stocks finally outperformed growth stocks in 2022 after lagging behind them for more than a decade. The value subset of the
index of most U.S. stocks lost about 8% after dividends through most of 2022, versus a nearly 30% loss for the growth subset, its worst showing in 14 years.
Rising interest rates clobbered growth-stock valuations—and rates are likely to keep climbing in 2023, albeit more modestly than in ’22. But expectations of a weaker economy and lackluster earnings growth may keep stocks with lower valuations in favor.