Quality Minus Junk Factor Surges 14.3% in July, Largest Monthly Gain Since 1957

The "Quality Minus Junk" (QMJ) factor, which tracks high-quality stocks against low-quality peers, jumped 14.3% in July, its largest monthly gain since records began in 1957 and a warning signal that previously appeared during the dot-com and financial-crisis bear markets. The move follows a record run in speculative shares driven by AI enthusiasm that saw a long-high-quality, short-low-quality portfolio lose 36% cumulatively from November 2023 through June 2026 — QMJ's worst stretch on record. A Goldman Sachs basket of loss-making tech stocks rose 57% in the first five months of this year, versus 11% for the S&P 500; the Russell 2000 gained 22.7% in the first half. QMJ fell 3.8% in the first eight months of this year after three straight annual losses. The rotation has since reversed. The Goldman loss-making tech basket fell 11% in the third quarter. AST SpaceMobile (ASTS) dropped 56% and D-Wave Quantum (QBTS) fell 52%, while Procter & Gamble (PG) rose 12.9%, Coca-Cola (KO) gained 17.3%, Church & Dwight (CHDN) added 12.4% and Colgate-Palmolive (CL) climbed 6.2% since June 30, all beating the S&P 500's 2.3%.