Market Extra: The stock market just experienced the most seismic shift from growth to value since Lehman Brothers, says Nomura

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Some of the most popular bets in the U.S. stock market have gotten pummeled in recent days, leading one analyst on Wall Street to declare it one of the biggest rotations from growth stocks into value stocks since the aftermath of the bankruptcy of Lehman Brothers back in mid September 2008.

In a Tuesday research note, Charlie McElligott, head of cross-asset strategy at Nomura, said the “three-day move in U.S. ‘Value / Growth’ has been the largest since October 2008—a 4.3 standard deviation event relative to the returns of the past 10 year period…”

See the chart below which shows a growth/value ratio over the past decade:

Source: Bloomberg/Nomura

McElligott’s comments come after the Nasdaq Composite Index COMP, +0.55% booked a three-session tumble that drove the technology-tinged index to its lowest level in about three weeks—a recent unraveling sparked partly by disappointments in quarterly updates from key members of the so-called FAANG contingent. Those include Facebook Inc. FB, +0.89% Apple Inc. AAPL, +0.20%  Amazon.com Inc. AMZN, -0.10% Netflix Inc. NFLX, +0.74% and Google Inc.-parent Alphabet Inc. GOOG, -0.20% GOOGL, -0.23%

Both Facebook and Netflix saw their shares fall into bear-market territory on Monday, defined by a decline of at least 20% from a recent peak, and nearly 40% of the S&P 500’s technology sector is in correction territory, typically characterized as a fall of at least 10% from a recent top.

What’s more, the NYSE FANG+ index NYFANG, +0.49% which comprises many of the aforementioned FAANG names as well as Twitter Inc. TWTR, +1.56% electric car maker Tesla Inc. TSLA, +2.75% Nvidia Corp. NVDA, +0.30% and Chinese e-commerce giant Alibaba Group Holding Ltd. BABA, +1.30% and Baidu Inc. BIDU, -1.68% fell into correction territory.

The index had enjoyed stellar performance, up 23.4% for the year, compared with a 2.8% gain for the Dow Jones Industrial Average DJIA, +0.43%  so far in 2018, a rise of over the past seven months of 5.3% for the S&P 500 index SPX, +0.49%  and year-to-date return of about 11.1% for the Nasdaq.

Read: Opinion: The biggest problem for Facebook and Netflix is they are running out of humans

Popular growth investing strategies, reflecting companies whose profits grow consistently and at faster clip than the overall market, have by far been the best performers in recent years, compared against traditional value investing, buying shares that are viewed as priced beneath their inherent value.

However, the stumbles in FAANG names have highlighted growth’s recent deterioration, with those large-capitalization tech and internet companies that have helped to push the broader market to new heights, losing some luster as investors fret about stock valuations and the outlook for economic growth in the ninth year of an economic expansion in the U.S., the second-longest on record.

So far this week, the S&P 500 Growth index SP500G, +0.68%  is down 1.2%, while, the S&P 500 Value index SP500V, +0.27% is up 0.2% over the same period. To be sure, over the longer-term, growth has been a steady outperformer, gaining 9.4% year-to-date, compared against action in value names that have left the S&P 500 value index little changed.

In a Monday note, Morgan Stanley said the outperformance by growth had it poised for an eventual reversal, as MarketWatch’s Ryan Vlastelica writes.

It remains to be seen if the recent moves represent a sea change for a reemergence for value, which has been overshadowed by growth plays, or if moves of the past few days are a blip.

Check out: How a tech meltdown could be contained

As McElligott writes: “The question now becomes whether value continue[s] to outperform growth if the tape turns to an outright ‘risk off’ one over the next few weeks of seasonal weakness, prior to commence of heavy (tech-led) buyback.”

Michael Antonelli, equity sales trader at R.W Baird & Co., said that although he sees some rotation from one segment of the market to another under way, he believes that it reflects investors selling winning bets, which happen to be shares of Facebook, Netflix and other growthy companies and moving into other sectors, rather than a more pronounced rotation out of growth to value.

“The rotation I think isn’t necessarily growth to value, it’s about selling the winners and that [happens to involve] growth stocks,” he told MarketWatch.

Only time will tell. However, so-called growth names were bouncing back higher again, with the Nasdaq rebounding on Tuesday to finish up 0.6% in Tuesday action, helping buoy the broad market.