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The "FOMO" trade is alive and well in markets once again.
Recent IPOs, like stablecoin issuer Circle (CRCL) and AI cloud company CoreWeave (CRWV), have both seen their stocks rise more than 100% since going public.
Shares of nuclear energy company turned AI play Oklo (OKLO) are up more than 70% in the past month. Quantum Computing (QUBT) shares are up more than 56% in the past month, and others in the space have also ripped higher.
"The commonalities are they're speculative," Interactive Brokers chief markets strategist Steve Sosnick said in an interview. "They're momentum-driven, and they almost always have some sort of tech veneer to them."
With the S&P 500 (^GSPC) back near record highs, the common pillars of the current three-year bull market have clearly returned in markets. Two of the most popular AI trades, Palantir (PLTR) and Nvidia (NVDA), are back to trading near all-time highs.
"It's kind of a freight train," Sosnick said. "Remember one of the great adages, 'the trend is your friend'? Well, people seem to be doing very well by following trends."
The momentum trade isn't a new phenomenon and has reappeared time and again during the S&P 500's nearly 70% run since the October 2022 lows. But it's the latest in a string of signs that market sentiment has recovered significantly from the height of April's tariff turmoil.
In Bank of America's latest Global Fund Manager Survey, 66% of investors said they believe the global economy will achieve a "soft landing," in which inflation falls to the Fed's 2% target without an outright downturn in economic activity. The eight-month high among respondents believing a soft landing is in sight comes as recession probabilities have tumbled over the past month, while consumers' worst fears about a tariff-driven inflation spike have also subsided.
BofA's global chief investment strategist Michael Hartnett wrote that the survey showed "investor sentiment back to pre-Liberation Day 'Goldilocks bull' levels."
But as is often the case when consensus begins to swing heavily in one direction, some believe the current market leadership could be ripe for change.
In a note to clients on Monday, Julian Emanuel argued for investors to seek "valor in valuation" as the summer approaches, with investors closely watching for updates on Trump's tariffs and whether or not they could disrupt economic growth.
Emanuel pointed out that the "attractive valuation" factor, including stocks like Verizon (VZ) and Tyson Foods (TSN), has lagged the "expensive" factor, which includes names like Coinbase (COIN), DraftKings (DKNG), Tesla (TSLA), and Strategy (MSTR). The 10.3% underperformance from the value group marks the seventh-worst rolling one-month average for that cohort of stocks against the expensive bucket since 1990, per Emanuel's work.
