Momentum Factor Roars as War Fears Fade on Wall Street

Risk appetite has surged on Wall Street as fears about the Middle East conflict fade, driving strong outperformance for momentum and high‑beta factor ETFs versus the broad market. The iShares MSCI USA Momentum ETF (MTUM) has rallied over 14% since the war began on Feb. 28, versus a roughly 5.3% gain for the S&P 500 (US SP 500/SPY) over the same period; MTUM closed at a record high on May 5. Micro‑caps and high‑beta ETFs have also led gains while low‑volatility (USMV) trails, down about 3% since the conflict started. Analysts point to resilient US energy fundamentals, robust Q1 corporate earnings (FactSet: blended S&P 500 earnings growth ~27.1%, with high rates of positive EPS and revenue surprises) and accelerating AI‑related capex as drivers of the rally. Overall market commentary is bullish, highlighting an unstoppable risk‑on stance that is lifting factor‑based ETFs and supporting broader equity strength.