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Quantum Leaps & Rare Earth Rallies: Decoding the Post-Plunge Market Action

Key Takeaways

  • Monday, bulls retook control after Friday's market plunge.
  • The market continues to be very theme driven.
  • Quantum computing, rare earth, and AI energy stocks led the way.

After a Friday plunge, stocks rebounded strongly on Monday. Below are five newsworthy market areas to monitor:

Small Caps Outperform

Small caps and the Russell 2000 Index (IWM) were the strongest stocks during Monday’s rebound. IWM gained 2.78% for the session, nearly clawing back all of Friday’s 2.99% loss. We remain constructive on the space as IWM works on a multi-year breakout.

Crypto Crashes Amid Overleverage, Rebounds Monday

The crypto market experienced its worst single-session market cap drop on Friday. Unfortunately, when President Trump shared his China message, many crypto investors were overleveraged and caught offside, causing a classic liquidation cascade in crypto and crypto proxies like the iShares Bitcoin ETF ((IBIT - Free Report) ).

MP Materials Soars on Rare-Earth Tensions

MP Materials ((MP - Free Report) ) has emerged as a big winner and a hedge of sorts for investors amid the China-US rivalry backdrop. Shares have broken out and are up over 30% this month amid the news about China’s rare-earth restrictions. Because the US government views rare earths as a national security pillar, MP is likely to continue to be a beneficiary as the US decouples from China and other hostile countries. Meanwhile, respected JPMorgan ((JPM - Free Report) ) CEO Jamie Dimon recently spoke about the need for the US to reduce reliance on foreign nations for rare earths and minerals.

AI Energy Stocks Soar Amid Flurry of Positive News

The artificial intelligence race between China and the United States is in full swing. While the US is off to an early (albeit, small) lead in the AI race, it is far behind in the energy race. Energy is critical to AI because AI data centers require significant energy. Monday, Bloom Energy ((BE - Free Report) ) spiked 26% after it announced a partnership to provide Brookfield with $5 billion in on-site fuel cells to power AI data centers. Meanwhile, Navitas Semiconductor ((NVTS - Free Report) ), bolted 30% after the market close, following an announcement of a deal to help Nvidia ((NVDA - Free Report) ) power the next wave of AI factories. NVTS makes chips that help to make AI data centers more efficient.

Quantum Computing Stocks Continue to Soar

Despite Friday’s plunge, investors continued to pile into high-octane quantum computing stocks. QC stocks are the top 2025 performers. Rigetti Computing ((RGTI - Free Report) ) has rewarded shareholders with an astonishing 6,000% return thus far in 2025. 

Bottom Line

Despite the Friday sell-off, Wall Street’s strongest industry themes reasserted themselves Monday. Quantum computing, rare earth, and AI energy stocks led the way.

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