Surprises, uncertainty, and sell-offs

As the saying goes, there’s nothing markets hate more than uncertainty—which is a bit of a Catch-22, since certainty is the one thing markets never really have. The constant flow of new information, and differing opinions about that information, makes certainty a perpetually moving target.

It may seem slightly more insightful to say that there’s nothing markets hate more than surprises, but since surprises are inevitable, it’s really just a different way of expressing the same thing.

Yesterday provided a good case study on how surprises can play out in in real time. Xometry (XMTR), which operates an AI-driven digital marketplace connecting manufacturing buyers and suppliers, was one of Tuesday’s market’s bigger decliners, down more than 22% midmorning after its pre-market earnings release:

The “surprise” didn’t come from the company’s headline earnings or revenue numbers, both of which topped estimates. Many traders would probably assume—with good reason—the company issued  disappointing forward guidance, which is a common culprit in earnings sell-offs when headline numbers themselves are solid. In this case, though, XMTR’s projections for Q1 revenues were well above analyst estimates.¹

In this case, the apparently unwelcome news may have been a leadership change—the company announced its current CEO (and co-founder) was stepping down from his position. Before curbing its losses, XMTR was down nearly 26% intraday, at which point the correction from the multi-year high it hit earlier in the month reached 41%:

Corporate leadership changes are—like any other type of market surprise—are inevitable, although some are more surprising than others. While CEOs are sometimes abruptly removed by corporate boards because of perceived underperformance (or, occasionally, scandal), that doesn’t appear to have been the case here. Xometry announced the current CEO would step down effective July, assuming a new role as “Executive Chair of the Board,” while the current President would assume the CEO role—a planned transition, announced well in advance of its execution.

Also, the change was occurring against the backdrop of solid corporate performance and a stock price that—despite the recent correction—was still up roughly 42% year over year.

Only time will tell whether or not Tuesday’s move was justified. There’s no getting around uncertainty in the markets, but it’s helpful to remember that markets sometimes “react first and ask questions later.”

Market Mover Update: GlobalFoundries (GFS) enjoyed its third-straight up day on Tuesday—but only after pulling back 11% from its February 12 intraday high (see “Chips on or off the table?”).

Today’s numbers include (all times ET): mortgage applications (7 a.m.), New Home Sales (10 a.m.), EIA Petroleum Status Report (10:30 a.m.).

Today’s earnings include: Agilent (A), Disc Medicine (IRON), Lowe's (LOW), NVDIA (NVDA), Pure Storage (PSTG), Snowflake (SNOW), TJX (TJX), Zoom Communications (ZM).

Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.

¹ StreetInsider. Xometry, Inc. (XMTR) Tops Q4 EPS by 4c ; Offers Guidance. 2/24/26.