US stocks are undergoing an unwind of the unwind
The AI trade is bouncing back, and boring consumer staple stocks are getting crushed.
The S&P 500’s retreat from all-time highs has been marked by an unwind of the momentum trade, which became heavily linked to AI. These stocks have faced seemingly unrelenting selling pressure since February 19, after Walmart issued an underwhelming 2025 outlook. Many safe, boring stocks enjoyed decent rallies over this time.
We’re now seeing the unwind of that unwind.
This is a continuation of what we saw during Tuesday’s sell-off, which brought some encouraging signs under the hood about the repair in this beaten-down factor: iShares MSCI USA Momentum Factor ETF rose while the lower beta stocks in iShares MSCI USA Min Vol Factor ETF fell.
As of about 11:30 a.m. ET, only one stock in the S&P 500 that fell 30% from February 19 through Monday is down over the past two sessions: HP Enterprise. Most are ripping, with CrowdStrike, Super Micro Computer, Tesla, and Vistra up double digits since Monday’s close. And every single stock that was up at least 10% from February 19 through March 10 has since declined.
