$100bn stock swings expose ‘fragility’ beneath Wall Street rally
Options and ETF frenzy have helped make largest US stocks more volatile, raising stakes ahead of Big Tech earnings
Emily Herbert in London
© FT montage/Getty ImagesDaily share price swings worth hundreds of billions of dollars are becoming commonplace on Wall Street, highlighting the risks to investors as the Big Tech companies powering the stock market’s relentless rally grow more volatile.
Individual stocks have gained or lost more than $100bn in market value in a single day 119 times so far this year, the highest annual total on record.
The rise of 12-figure stock swings partly reflects the huge size of companies such as Nvidia, Microsoft and Apple, which are all worth more than $3tn each and account for the bulk of the huge moves.
But even accounting for the stock market’s growth, the size of this year’s moves has been extraordinary.
Bank of America analysis shows that 2025 has already punched through 2024’s record number of what it calls “fragility events” in Big Tech stocks, when share prices move well outside their usual range.
“We have large-cap stocks moving 10, 20, 30 per cent in a day,” said Abhi Deb, head of global cross-asset quant investment strategy at BofA.
“That kind of price action used to be rare.”
The volatility of the biggest stocks has raised the stakes as five tech giants worth a combined $15tn — Meta, Alphabet, Microsoft, Apple and Amazon — report quarterly earnings this week.
“The downside could be quite brutal” if the companies disappoint markets, said Valérie Noël, head of trading at Syz Group.
Despite the big individual stock moves, overall market volatility has mostly remained muted as the S&P 500 has rebounded to a series of record highs from April’s heavy sell-off because big stocks have tended not to all swing in the same direction.
The “warning sign” would be if this changed, said Deb.
“If you get a macro shock where stocks move in unison, the index will move a lot more.”
This year’s tally of stock moves of $100bn or more is the highest on record, and compares with 84 for all of last year and 33 during the bear market of 2022 when the S&P tumbled by almost one-fifth.
A big driver of the share price moves is the derivatives market, where retail investors and hedge funds have been piling into short-term bets on single stocks around earnings and macro events, according to Goldman Sachs.
This forces market makers to hedge themselves by putting on their own positions, which can exacerbate moves in share prices.
The volume of trading in single-stock options this month reached its highest level since the 2021 meme-stock craze, Goldman data shows, with retail investors accounting for 60 per cent of this market.
Single stock and leveraged exchange traded funds — for example, funds that offer two or three times the return of a single stock each day — have also sucked in assets this year, adding extra leverage.
Earlier this month, Volatility Shares filed to launch ETFs with five times leverage on stocks including Nvidia, Alphabet and Tesla.
Analysts say leveraged products exacerbate price movements because issuers have to buy more exposure to a stock if the price rises, or sell if it falls, on a daily basis in order to maintain a fund’s target leverage ratio.
“These $100bn-plus stock swings have become far more common” because of “the rise of quantitative trading strategies, zero-day options and double or triple-leveraged ETFs on single stocks”, said Noël.
The churn beneath the surface has tended not to translate into a more volatile index this year.
Although Wall Street’s “fear gauge”, the Vix, briefly spiked earlier this month after a flare-up in US-China trade tensions, the US equity market had enjoyed its least volatile quarter since 2018 in the three months to September.
Current market themes such as artificial intelligence, tax changes and the global trade war have hurt some stocks while boosting others, said John Marshall, head of derivatives research at Goldman Sachs.
That has contributed to “ultra-suppressed” levels of correlation between stocks this year, according to UBS, meaning the moves have little impact on overall market volatility.
But sharp moves in individual stocks could start to pose a greater risk to market stability if that correlation picks up again and these big stocks potentially witness a co-ordinated sell-off, warn analysts.
Maxwell Grinacoff, head of US equity derivatives research at UBS, saw the potential for a “flows cascade”, where traders positioned for further price rises quickly have to dump their positions.
JPMorgan analysts estimate that on October 10, when Wall Street suffered its sharpest one-day sell-off since April, leveraged ETFs were forced to sell $26bn of equities when the market closed in order to maintain their fixed leverage requirements.
“I think the risk is things become too frothy, too exuberant and everything starts going up in tandem,” said Grinacoff.
“The second you have an unknown unknown derail everything, it can all move in the opposite direction at once.”
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