The stock market is experiencing a concerning trend as market leaders are rapidly becoming laggards, with some of the best-performing stocks declining significantly.
Market leaders are quickly becoming laggards, a trend that could send a near-term negative sign for the broader market. This is not just about stocks stopping their upward momentum or failing to outperform; it’s about some of the best-performing stocks meaningfully declining.
Reversal of Fortune: Market Leaders Under Pressure
Several high-profile stocks have experienced significant losses in recent weeks, including Robinhood (HOOD) and DraftKings (DKNG). These companies had broken out to the upside on earnings but ended last week below their pre-earnings trend. For example, ‘16% in the past five sessions’ is how much HOOD has lost, while DKNG shed 25%. Other leaders under pressure include JPMorgan (JPM), Goldman Sachs (GS), and Palantir (PLTR).
Robinhood stock refers to the shares of the American financial services company, Robinhood Markets, Inc.
The company is known for its commission-free trading model, allowing users to buy and sell stocks without paying brokerage fees.
Founded in 2013 by Vladimir Tenev and Baiju Bhatt, Robinhood has gained popularity among retail investors due to its user-friendly platform and low-cost services.
As of 2022, Robinhood's stock is listed on the NASDAQ exchange under the ticker symbol HOOD.
Why This Trend Matters
The reversal of fortune among market leaders is a cause for concern. Strategist Jeff Jacobson notes that if these stocks continue to struggle, it could be hard for the indices to make new meaningful highs in the short-term. Additionally, continued weakness in these names could result in further pain on the index level.
Seasonal Weakness and Key Catalysts Ahead
The market is already dealing with new concerns, such as tariffs and potential rate cuts from the Federal Reserve this year. The upcoming seasonally weak period and key catalysts like Nvidia earnings, the February jobs report, and a Fed policy decision will also put pressure on the market.
The Federal Reserve, also known as the 'Fed', is the central bank of the United States.
Established in 1913, it plays a crucial role in regulating the US economy through monetary policy decisions.
The Fed sets interest rates and buys/sells government securities to control inflation and stabilize financial markets.
It also supervises and regulates banks, credit unions, and other financial institutions to ensure their stability and soundness.
With its headquarters in Washington D.C., the Federal Reserve has 12 regional branches across the country, employing over 17,000 staff members.
Real Leaders Continue to Struggle
Even the ‘Magnificent Seven’ trade of top-performing tech stocks has been a mixed bag in 2025. Only one of these large-cap tech components – Meta (META) – has meaningfully outperformed the S&P 500 this year, despite last week’s sell-off.
Not All Experts Agree
Some pros argue that traders are reading too much into the weakness of market leaders. Louis Navellier, founder and chairman of Navellier & Associates, believes that earnings have been spectacular for the Mag 7, making it natural to see some weakness in their stocks.
Louis Navellier is a renowned American investment researcher and editor of several financial publications.
He is known for his stock market predictions and has been featured in various media outlets, including Fox Business News and CNBC.
Navellier's research focuses on identifying undervalued stocks with high growth potential.
His investment strategy emphasizes long-term investing and avoiding get-rich-quick schemes.
With a career spanning over three decades, Navellier has built a reputation as a trusted voice in the financial industry.
