The factor derby is down to two horses

S&P 500, Dow futures dip, Nasdaq 100 slightly green

Euro STOXX 600 index ~flat

Dollar, gold ~flat; US crude rises >1%; bitcoin down ~1%

US 10-year Treasury yield edges down to ~4.76%

After July's momentum meltdown, August was a much calmer ride for stocks, and that strength carried into the first few days of September. But the mood is turning more cautious on Tuesday. U.S. equity index futures are pointing to a mixed open as renewed tensions in the Middle East boost oil prices, adding another layer of uncertainty ahead of key inflation data later this week.

With markets entering the final third of the year, the battle for factor leadership is increasingly looking like a two-horse race.

For investors, factors are simply groups of stocks that share common characteristics, whether that's momentum, growth, value, quality, small-cap exposure, or low volatility. Which styles lead tends to depend on the economic and market backdrop.

So far in 2026, momentum remains the frontrunner. Through Friday's close, the iShares Momentum ETF MTUM.K was up 21.8%, comfortably ahead of the SPDR S&P 500 ETF SPY.P, which has gained 12.9%.

But momentum's lead is far from secure. Small caps are right on its heels, with the Russell 2000 ETF IWM.P up 20.3% this year.

Beyond those two standouts, performance drops off noticeably. The iShares Core S&P Mid-Cap ETF IJH.P has gained 14.9%, while the SPDR S&P 500 Growth ETF SPYG.P is up 14.1%.

At the other end of the spectrum, defensive strategies continue to lag. The Invesco S&P 500 Low Volatility ETF SPLV.P has been this year's biggest underperformer, up just 4.6%, compared with a 12.9% gain for the broader market.