markets

Matt Phillips9/24/25

Momentum stocks sputter, weighing on markets

Risky momentum stocks that retail traders piled into this year sputtered on Wednesday, throwing a bit of sand in the market rally.

Recent retail favorites like Rocket Lab, Hims & Hers, Palantir, Oklo, and SoundHound AI — all members of Goldman Sachs’ thematic basket of “high beta momentum stocks” — were in the red on the day, with little specific company news, suggesting the pullback is more about the market rethinking a broad-based trade rather than expressing specific concerns about individual companies.

Shortly before 1 p.m. ET, the iShares MSCI USA Momentum Factor ETF was down 0.7%, its worst day since late August.

Why is momentum suddenly sputtering? That’s the tricky bit.

The current crop of momentum stocks tends to be stocks with very high valuation ratios, suggesting that the traders buying them are betting their earnings will come far in the future rather than any time soon. (That is, of course, if they’re not just buying them based on the fact that they’ve gone up a lot.) But it’s impossible to say exactly why the momentum trade is fizzling a bit today.

It could be that after a giant romp — Rocket Lab, for example, is up almost 50% over the last three months — these stocks just need a breather.

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SpaceX went public on June 12 at a $2.2 trillion valuation, the largest debut in history. While the company hasn’t yet posted a profit, it seems to have convinced Wall Street that it will get there and grow its valuation on the way.

Of the at least 17 analysts that gave a rating on Tuesday, all but one gave it a “buy” or “outperform” rating. MoffettNathanson was "neutral."

The ratings come as SpaceX joined the Nasdaq 100 index, a benchmark tech-heavy basket of companies that underpins millions of portfolios. The inclusion adds built-in demand for the stock from index funds and ETFs.

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

Revenue of $11.0 billion (estimate: $10.8 billion).
Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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