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Megacaps have dragged markets into the red this year, but a majority of the S&P 500 is still in the green

52% of the S&P 500 has made gains in 2025. So far.

3/5/25 8:30AM

Markets have turned red this week, with America’s flagship index, the SPDR S&P 500 Trust, shedding the last of its postelection gains as traders rushed to the exits on “Tariff Tuesday,” compounding Monday’s 1.8% fall.

As companies and investors continue to digest President Donald Trump’s trade policy and the retaliatory measures it has inspired, investors are simultaneously reevaluating the AI trade on the fly. Yesterday afternoon’s price action suggested they aren’t giving up on it just yet.

Middle market

As we take stock on Wednesday morning, it’s worth zooming out and noting that 264 of the S&P 500’s constituents, or a little over 52% of the index, are actually still up in 2025. Indeed, if you woke up this morning after being asleep since New Year’s Eve, you’d have a hard time guessing that we’ve already had the “DeepSeek freak,” uncertainty over rising geopolitical tensions, and tariffs hitting the headlines this year, with the median S&P 500 stock up 0.7% in 2025.

The star of the S&P 500 Class of Q1 so far is CVS Health, which has jumped 45% since the start of the year, closely followed by Philip Morris International and Super Micro, which is doing the absolute bare minimum to remain on the market. Uber also joins the all-star lineup, ahead of Meta, which is the best of the Big Tech stocks, evading the pain of peers Amazon (-7%), Nvidia (-14%), and Tesla (-33%), which are all down. But the one company that’s down deepest in the trenches is UGG and Hoka shoe company Deckers, which never recovered from getting stomped after its underwhelming Q3 update.

So, not everything is down this year... but if you are nervous about a sustained market drop, it might be helpful to know which stocks are most, and least, sensitive to a market crash. Here’s a handy list of each, based on the last three years of data.

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Matt Phillips1h

Insurance against Oracle default becomes favorite AI-bust hedge, Bloomberg reports

Volume in the market for credit default swaps — essentially a kind of insurance against a company defaulting on its debts — on Oracle is surging as the company has supercharged its borrowing to finance its AI ambitions, Bloomberg’s Caleb Mutua reports:

“The price to protect against the company defaulting on its debt for five years tripled in recent months to as high as about 1.11 percentage point a year on Wednesday, or around $111,000 for every $10 million of principal protected, according to ICE Data Services.

As AI skeptics rushed in, trading volume on the company’s CDS ballooned to about $5 billion over the seven weeks ended Nov. 14, according to Barclays Plc credit strategist Jigar Patel. That’s up from a little more than $200 million in the same period last year.”

A Hedge Against AI Crash Emerges as Oracle CDS Market Explodes

“The price to protect against the company defaulting on its debt for five years tripled in recent months to as high as about 1.11 percentage point a year on Wednesday, or around $111,000 for every $10 million of principal protected, according to ICE Data Services.

As AI skeptics rushed in, trading volume on the company’s CDS ballooned to about $5 billion over the seven weeks ended Nov. 14, according to Barclays Plc credit strategist Jigar Patel. That’s up from a little more than $200 million in the same period last year.”

Nvidia dunks on the doubters

CEO Jensen Huang and CFO Colette Kress dismantled most of the recent arguments and bear cases put forward by their naysayers.

Luke Kawa2h

Matt Phillips3h

Cipher Mining surges on additional AI hosting deal

Bitcoin miner turned AI compute power provider Cipher Mining jumped early Thursday after announcing a deal that fully leases its Barber Lake data center in Colorado City, Texas.

The deal — which is also giving a lift to IREN, another miner turned compute provider — is an expansion of a previous agreement with Fluidstack, a UK-based provider of GPU-based cloud networks. The new deal amounts to roughly $830 million in additional revenue over 10 years, Cipher says.

The market clearly loves it. But it’s worth pointing out that this agreement is a pretty good example of the byzantine financial structures that are increasingly accompanying plans for many billions of dollars of spending on the AI boom.

For example, Cipher also announced Thursday that it would be borrowing $333 million to finance an expansion of that Barber Lake data center through a private placement of debt.

That offering will be secured, in part, by the warrants Google received to purchase Cipher common stock worth roughly 5.4% of the company. (Those warrants, by the way, look a lot more valuable today, with Cipher mining up double digits.) Google is also backstopping Fluidstack’s borrowing plans to finance its build-out to the tune of $1.4 billion.

For now, this makes financial sense. Alphabet — one of the most successful companies on the planet — needs the computing power to compete in the AI race. And the quickest way to get that capacity is to essentially cosign leases for the smaller companies taking the lead in that build-out, thereby lowering development costs and helping to bring projects into existence.

But in this deal alone, things get awfully complicated awfully quickly, as Alphabet is essentially the prime customer of, an important debt guarantor for, and potentially a significant owner in Cipher Mining, once it transfers the warrants into an ownership stake of more than 5%.

This isn’t, on its face, a terrible thing. There are precedents for circular funding relationships in industries like aerospace, as it developed from the 1920s to the 1950s.

But financial complexity does have a history of essentially hiding the level and locus of financial risks a system is building up, essentially during periods of heady optimism.

Cipher Mining Signs Additional 56 MW, 10-Year AI Hosting Agreement with Fluidstack

This isn’t, on its face, a terrible thing. There are precedents for circular funding relationships in industries like aerospace, as it developed from the 1920s to the 1950s.

But financial complexity does have a history of essentially hiding the level and locus of financial risks a system is building up, essentially during periods of heady optimism.

Luke Kawa5h

Odds of December Fed cut creep higher after unemployment rate unexpectedly rises in September

The September jobs report was a mixed bag: much better job growth than anticipated, but the unemployment rate unexpectedly edged higher.

The release of this data, which was delayed by the government shutdown, showed that nonfarm payrolls grew 119,000 (compared to the expected 51,000), but the unemployment rate crept up to 4.4%, while economists thought it would remain steady at 4.3%.

Event contracts show that the likelihood of the US central bank standing pat in December moderated to about 65% from around 75% prior to the release.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

Job growth for the prior two months was revised lower by 33,000.

The market-implied odds of a Fed cut in December tanked on Wednesday after the Bureau of Labor Statistics said that the updated employment statistics through November wouldn’t be published until December 16 — that is, the week after the US central bank’s last meeting of the year.

During the press conference that followed the October decision to lower rates by 25 basis points, Fed Chair Jerome Powell said that a dearth of fresh data “could be an argument in favor of caution about moving,” adding that a rate cut in December was “far from” a foregone conclusion.

Fedspeak since that October rate cut has generally tilted hawkish. Some voting members like Boston Fed President Susan Collins and Kansas City President Jeffrey Schmid (who dissented from the last cut) have signaled that they are unlikely to support an interest rate cut in December. Fed Governors Chris Waller and Stephen Miran have publicly endorsed another rate reduction, while other officials have yet to take a definitive stance. The minutes from the October meeting said that “many participants” thought “it would likely be appropriate to keep the target rate unchanged for the rest of the year.”

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Retail traders’ success is thanks to doubling down on two things that have worked: “AI” and “buy the dip”

Main Street bought after weakness at three distinct moments early in the year.

Luke Kawa6h

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