• The XLY Consumer Discretionary ETF is the most volatile among the sector SPDRs. One key reason is its inclusion of Tesla (TSLA), the most volatile mega-cap stock.

• The consumer discretionary sector is inherently cyclical and economically sensitive, making it highly reactive to macroeconomic news. The sector is also exposed to tariff-related risks, further contributing to its volatility.

• In contrast, the XLP Consumer Staples ETF—the other major consumerfocused SPDR—is far less economically sensitive and exhibits the lowest volatility among sector ETFs.

Short interest in OMC has increased by 18 million shares—rising from 5% to 14% nearly three times that level—as arbitrageurs established positions by buying IPG and shorting OMC.

XLY also demonstrates the strongest negative correlation between stock price and short interest.

Graphs of stock price and short interest often appear as mirror images, suggesting that investors are shorting as prices decline and covering as they rise—a classic momentum-driven strategy. This behavior amplifies volatility.

TSLA, as a core holding in XLY and the most volatile mega-cap stock, reflects a similar inverse relationship between price and short interest.

Within XLY, passive ownership is negatively correlated with stock price. Passive investors tend to increase their holdings as prices fall and reduce them as prices rise. Meanwhile, other market participants appear to be employing momentum strategies on the long side, further intensifying price swings.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.