Goldman Sachs partner and EMEA head of hedge fund business Mark Wilson said the current momentum selloff has lasted 17 trading sessions, with the U.S. momentum factor down 28% from its peak and the technology, media and telecom momentum basket off 40%. He described the move as the fastest and deepest drawdown on record for that segment. In a breakdown across markets, KOSPI has fallen 27% from its high, U.S. AI beneficiaries are down about 25%, global memory chip stocks have dropped 36%, and European semiconductors have lost 23%. Goldman data also showed that volatility in a high-beta momentum portfolio is running at roughly 10 times that of the S&P 500, while average single-name implied volatility stands at 2.8 times the index. Wilson said the selloff has been driven mainly by crowded positioning, concentrated leverage and deleveraging rather than deterioration in macro conditions or corporate earnings. He added that U.S. bank lending and consumer data are still growing, and that Taiwan Semiconductor Manufacturing Co. and ASML both delivered constructive business signals, even though related shares still fell after earnings. His view is that the momentum unwind is likely close to ending, but the market still lacks an immediate catalyst for a rebound, with tech valuations remaining elevated and leadership likely to become clearer only after second-quarter earnings are absorbed.
On July 19, Goldman Sachs partner and EMEA head of hedge fund business Mark Wilson said the current momentum-driven selloff has lasted 17 trading days. The U.S. momentum factor has pulled back 28% from its peak, while the technology, media and telecom momentum basket has fallen 40%, which he described as the fastest and deepest drawdown on record.
Pullback spread across several market segments
In a market-by-market breakdown, KOSPI is down 27% from its high, U.S. AI beneficiary stocks have retraced about 25%, global memory chip names have fallen 36%, and European semiconductor stocks are down 23%.
Goldman points to deleveraging as the main driver
Goldman Sachs data showed that volatility in a high-beta momentum portfolio is running at about 10 times the level of the S&P 500. Average implied volatility for individual stocks has reached 2.8 times that of the index.
Wilson said the selloff has been driven mainly by crowded positioning, concentrated leverage and deleveraging, rather than weakening macroeconomic conditions or worsening corporate earnings. He also noted that U.S. bank lending and consumer data remain in growth territory, while Taiwan Semiconductor Manufacturing Co. and ASML both signaled strength in their businesses, even as related shares still declined after earnings.
No clear near-term catalyst for an immediate rebound
Wilson said he is inclined to think the momentum unwinding process is nearing its end. Even so, he added that the market still lacks a catalyst strong enough to trigger an immediate reversal in the near term. Tech sector valuations remain elevated, and the next market leadership trend may become clearer only after second-quarter earnings are fully absorbed.
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