Risk-on and risk-off

Risk-on and risk-off describe broad shifts in investor sentiment across the whole market. In a risk-on environment, investors are optimistic and favor riskier, higher-growth assets. In a risk-off environment, investors turn cautious and rotate toward safer assets like cash and government bonds.

These shifts can move a stock's price for reasons that have nothing to do with that specific company, driven instead by macroeconomic news, interest rate expectations, or broad market fear. Recognizing when a stock move is a risk-on or risk-off reaction versus a company-specific development is an important part of interpreting short-term price swings.