US Equity Factor Insights May 2026

Barclays adopts a 'Risk-on' factor stance for May 2026, upgrading Growth and Momentum to Positive while downgrading Quality to Negative. They remain bullish on Large-cap over Small-cap equities driven by superior earnings growth in the TMT sector.

Key Takeaways

• 1.Barclays has upgraded Growth and Momentum to Positive as risk-on sentiment returns to the market following strong earnings and fading geopolitical concerns.
• 2.The report maintains a Positive stance on Large-cap over Small-cap stocks, citing better operating leverage, margins, and earnings revisions for mega caps.
• 3.Quality has been downgraded to Negative because its defensive attributes are out of favor as investors rotate back into speculative AI-linked sectors like semiconductors.

Table of Contents

• What's changed
• What's driving the change
• What stays the same?
• US factor analysis and views: May 2026
• Equity market performance in April 2026
• US Factor Basket Performance in the Past Month
• US Factor Discussion & Recommendations
• Turn Positive on Growth and Neutral on Value
• We stay Positive on Large-over-Small
• Upgrade Momentum from Neutral to Positive
• Turn Negative on Quality
• Upgrade to Neutral on High-over-Low Volatility
• Stay Neutral on Yield (Dividends + Buybacks)
• Analyst(s) Certification(s)
• Important Disclosures

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