Concentration Risk: Few Stocks Dominate US Market Volume Amid Thin Liquidity
Nvidia leads as the most actively traded stock, but some high-volume names show wider spreads and smaller order sizes, hinting at fragile liquidity.
A handful of stocks are driving an outsized share of U.S. market trading volume. Nvidia ($NVDA) tops the list, accounting for 3.0% of total market notional volume year-to-date. It is followed by Micron ($MU) at 2.8%, Tesla ($TSLA) at 2.1%, and SanDisk ($SNDK) at 1.5%.
Collectively, the 10 most-traded stocks have represented an average of 16.4% of total market notional volume YTD. This concentration comes despite signs of weaker liquidity in some of these names.
SanDisk stands out with an average bid-ask spread of 12.4 basis points, more than double the S&P 500 average of 5.9 bps. Tesla, Microsoft ($MSFT), and Alphabet ($GOOGL) also show smaller average order sizes at the best bid and offer compared to the typical S&P 500 stock, indicating thinner depth despite their heavy turnover.
Source: The Kobeissi Letter