Stock fragility near record levels, stirring memories of dot-com bubble

by Natalia Kniazhevich

Rising instability among some of the biggest US stocks is driving a measure of single-stock “fragility” to record levels, with the market increasingly vulnerable to whipsaw patterns among clusters of shares such as occurred in the dot-com bubble of the late 1990s.

Stock fragility, a measure of a company’s daily share-price move relative to its recent volatility, is on track to reach its highest in more than 30 years among the largest 50 stocks in the S&P 500 Index, based on the average magnitude and frequency of such individual shocks so far in 2025, according to Bank of America Corp. strategists. 

That’s as far back as their research goes, and covers not just the internet boom but also Russia’s default and the Asian financial crisis earlier in the ‘90s. The increasing jitters among single stocks flashes a potential warning for the broader market even as stock indexes hover near records — and combined with tariff and interest-rate concerns adds to a potentially worrisome mix. 

“The sideways range the stock market has been in for almost three months is hiding a big increase in volatility for individual stocks,” Matt Maley, chief market strategist at Miller Tabak + Co., said via email. “When you combine this with higher bond yields and concerns over tariffs, it has created a much higher level of uncertainty and nervousness than we usually see when the market is near an all-time high.”

Last month, when the emergence of China’s DeepSeek artificial intelligence model triggered a market selloff among tech shares led by Nvidia Corp., 70 of the S&P 500 stocks experienced fragility events with moves of three standard deviations or greater, showing the potential for clustering that could trigger wider reverberations. 

“DeepSeek showed how a catalyst can get a lot of these things to move in a big way and we saw similar episodes of clustering in the dot-com bubble,” Nitin Saksena, Bank of America’s head of US equity derivatives research, said in a phone interview.      

US stock fragility jumped to multi-year highs last year when megacap stocks like Nvidia and Tesla Inc. saw big moves on earnings. The trend continued in 2025 but now it’s becoming more widespread and pervasive. International Business Machines Corp. posted a 14 standard-deviation move on its earnings result, the biggest move this year so far among the 50 largest stocks in the S&P 500. 

Outsized swings in pharmaceutical giant Merck & Co. Inc. and tobacco company Philip Morris International Inc. — this year’s second-biggest negative and second-biggest positive moves, respectively — show that fragility is spilling over to other corners of the market, too.

High fragility eventually impacts the broader market as the largest outliers, including the tech giants, have some of the biggest weights in stock indexes. For investors, especially those who want to keep exposure to tech, it suggests adding lower-volatility shares into their portfolio composition.  

Technology stocks in the Russell 1000 Index with the lowest trailing price swings have outpaced their high-volatility tech counterparts, according to data compiled by Bloomberg Intelligence’s Christopher Cain. 

Since the start of 2024, BI’s low-volatility factor, which includes technology stocks that show the lowest average standard deviation of daily returns over six and 12 months, has increased 22%, compared with just 13% for the high-volatility group. 

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