By Martin Baccardax

When a company that hasn't posted a quarterly profit in more than five years surges more than 140% in a day, and the world's benchmark flight-to-safety asset falls the most in five years, it is safe to say there is something weird happening in financial markets.

Although the S&P 500 has only edged 0.6% higher over the past month, Beyond Meat's enormous gains over the past three days suggest speculative appetite remains deeply embedded in the market. Stock in the plant-based food company is now trading more than 700% north of last week's closing prices.

Gold's recent record-setting rally, and this week's near 8% slump, also suggest there has been a level of FOMO, or fear of missing out, that has led risk-seeking investors into different corners of the market in search for the next big move.

"We do see some signs of irrationality, or speculative behavior, with a pickup in 'meme stock' investing among retail investors guided by social media trends," said Tony DeSpirito, global chief investment officer at BlackRock Fundamental Equities.

Volatility surged last week, and stocks that might ordinarily be expected to go nowhere are taking off as mainstream investors question the strength and pace of the S&P 500 rally heading into the final months of the year.

Apollo Global's chief economist, Torsten Sløk, noted earlier this week that companies in the Russell 2000 that are losing money have outperformed those which are actually making a profit over much of the past three months.

The speculative hunt for big gains is also a critical factor behind the historic rally in gold, which began as a flight to safety in response to concern about the sliding value of the dollar and the U.S.'s worsening fiscal situation. Bullion prices have risen more than 33% from the beginning of August to Monday's all-time high of $4,380 an ounce.

Gold markets have also been affected by a lack of transparency tied to the U.S. government shutdown, now entering its fourth week, which has seen the suspension of the crucial Commitments of Traders reports from the Commodity Futures Trading Commission. That report details the long and short positions of hedgers and speculators in a variety of futures markets.

"The absence of positioning data comes at a delicate time with a potential build up in speculative long exposure in both metals making both more vulnerable to correction," said Ole Hanson, Saxo Bank's head of commodity strategy.

Joe Tigay, portfolio manager of the Rational Equity Armor Fund, sees gold in an even more troubling light. "Everyone talks about how risky stocks are, and how we're in a bubble," he said. "But gold has become the 'risk-free' trade that nobody questions. That's precisely when you should question it."

Benchmark volatility gauges have settled over the past few trading sessions, however. The Cboe Group's VIX index was last marked at nearly 18.50, well below last week's multimonth peak of around 25.31.

But with President Donald Trump sending mixed signals on trade talks with China, Supreme Court hearings on the legality of his use of emergency powers to impose sweeping tariffs on the way, and credit markets wobbling over worries linked to bad loans in the auto sector, investors are keeping a cautious eye on headline developments.

"While the market has been caught in quite a traffic jam of negativity lately, its uptrend, while stalled, is far from derailed," said Eric Clark, chief investment officer at the Accuvest Global Advisors investment group.

Next week's slate of big tech earnings, including updates from Microsoft, Google, Meta Platforms, Apple, and Amazon.com, could certainty steady the ship. But they could also stoke another run-up in the valuations of AI-related stocks.

That remains another simmering concern for investors looking for evidence that the billions being spent on data centers and chips is finding its way into the bottom line of the market's most important stocks.

"There is no question that there's a fair amount of investor exuberance at the moment with U.S. equity markets consistently hitting record highs over the last several months," Goldman Sachs CEO David Solomon told investors last week. "We are especially vigilant in times like these."

Write to Martin Baccardax at martin.baccardax@barrons.com

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October 22, 2025 11:14 ET (15:14 GMT)

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