According to Zhitong Finance APP, on Monday, investors flocked to the riskiest sectors of the USA stock market, giving a significant boost to stocks that performed poorly last year. Loss-making Technology companies, distressed companies, and those with high short positions became big winners on Monday. In the first few Trade days of 2025, these stocks outperformed the S&P 500 Index.

Goldman Sachs' non-profitable Technology stock index closed up 3.3%, while the index for the stocks with the most severe short selling rose 1.8% at one point but closed almost unchanged. Last year, both of these Goldman Sachs indices (especially the one tracking non-profitable Technology companies) lagged behind the benchmark Index.

Michael O’Rourke, Chief Market Strategist at Jonestrading, stated: "After Christmas, the fervor for elections resurfaces. This represents aggressive risk trading. I believe this is a short-term phenomenon at the beginning of the year, and it may lose momentum by the end of this week."

In 2024, non-profitable Technology stocks performed far worse than the S&P 500 Index.

However, the increase in risk appetite did not significantly boost Small Cap stocks, as the E-mini Russell 2000 Index lagged behind the S&P 500 Index on Monday. The E-mini Russell 2000 Index fell 0.1%, while the S&P 500 Index rose 0.6%.

The emergence of risky trading comes at a time when Global uncertainty is intensifying. The newly elected President of the USA, Donald Trump, may introduce a new round of tariffs later this month after taking office, sparking a trade war with major allies. The Federal Reserve's interest rate path is also unclear, as inflation remains more stubborn than expected. Meanwhile, concerns over the overvaluation of Technology stocks are beginning to escalate.

Despite these concerns, a series of Bullish news released on Monday drove up Technology stocks. First, NVIDIA's (NVDA.US) server assembly partner, Foxconn's parent company Hon Hai Precision, reported that its revenue growth rate exceeded expectations due to continued demand for AI infrastructure. Then, Qualcomm (QCOM.US) launched new chips aimed at powering personal computers capable of running the latest AI Software, priced at only $600. Investors also expect that NVIDIA CEO Jensen Huang's speech will boost the chip manufacturer's stock price.

Jonestrading's stock sales trader and macro strategist Dave Lutz said, "The news from Foxconn, combined with the anticipated announcements from the Consumer Electronics Show, seems to be triggering a broad Bid in Technology stocks, resulting in a significant short squeeze." A short squeeze refers to traders who short a stock being forced to buy back shares to cover losing positions. This buyback further drives up the stock price.