Volatile stocks are getting shellacked — and they’re the jumpiest they’ve been since the aftermath of April’s tariff announcements
The high-flying, more speculative pockets of the market are getting crushed today, after ripping higher yesterday, which was preceded by them getting slammed on Tuesday.
So if you think volatile stocks beloved by retail traders have been, well, more volatile lately, you wouldn’t be wrong.
Two baskets compiled by Goldman Sachs that track “non-profitable tech” and “high-beta momentum long” stocks have seen their annualized 21-day realized volatility spike to levels not seen since May — that is, when the carnage of early April’s mauling after the announcement of reciprocal tariffs was still in the observation window.
As we’ve recently discussed, these two cohorts have effectively been a version of the “corporate wants you to find the difference between these pictures” meme for the past few months. In other words, they’re swinging in unison.
“In contrast to the behavior observed during the post-Liberation Day selloff, retail investors did not seize the opportunity to buy-the-dip on Tuesday, with a few exceptions such as META,” writes JPMorgan strategist Arun Jain. “In fact, they scaled back their ETF purchases and turned net sellers in single stocks.”
The S&P 500 is less than 3% off from its all-time high. When volatile stocks were this jumpy ahead of those aforementioned Rose Garden decrees, the benchmark US stock index was already nearly 10% off its peak.
Names that broadly fit the retail-cherished, high-beta descriptor and have a loose relationship with profitability include Oklo, IREN, Cipher Mining, POET Technologies, CoreWeave, SoundHound AI, Plug Power, Rigetti, Bloom Energy, Opendoor Technologies’, and D-Wave Quantum. They’re all down big on Thursday.
If you think the stock market has played an important role in supporting US consumption this year, you can make an argument that this is the kind of thing that could have a negative impact on economic activity. In an asset-backed economy, high-beta speculative momentum stocks might actually be the real cyclicals.
