Momentum Trade at New Extremes Is Drawing Wall Street Warnings
Traders work on the floor of the New York Stock Exchange.
Photographer: Michael Nagle/BloombergThe momentum trade — buy what’s winning, sell what isn’t — was already running red-hot heading into this week. Now a pause in the Iran war, strong US jobs data and another sharp rally in AI chips just piled on more fuel.
The same risk-on playbook is working across everything from junk bonds to crypto. In the stock market, one momentum index closed Friday near the highest since the global financial crisis as the S&P 500 punched to a new peak, a gauge of chipmakers jumped 11% in five sessions, and oil drifted lower on hopes for an end to the Iran conflict.