STOCKS | Goldman Sachs Trading Desk Swamped With Calls, but Buyers Remain Absent

Goldman Sachs’ equity trading desk was flooded with investor calls asking when Thursday’s sharp technology-stock selloff would bottom, but buyers were nowhere to be found. According to Sina Finance, John Flood, Goldman Sachs’ head of Americas equity execution services, said Wednesday was one of the desk’s busiest trading days of the year, while on Thursday the phones were ringing with questions about market conditions but the desk saw little buying. Flood said long-only funds were again sitting on the sidelines. Investors had sharply reduced risk exposure ahead of the midterm elections, but Wednesday’s rally caught them off guard and drew them back into the market. Hedge funds were now selling some of the mega-cap cloud stocks they had bought in the previous session. Goldman saw no buyers stepping in to support the market, and brokerages with substantial retail businesses had significant selling imbalances for a second consecutive day, according to Goldman clients. Investors were reducing risk through broad-market products. Trading volume in the SPDR S&P 500 ETF was 160% above its 20-day average; volume in the Invesco QQQ ETF was double its average; the VanEck Semiconductor ETF was 150% above average; and volume in DRAM-related stocks rose 75%. Flood described the pressure as immense and wrote, “It’s always darkest before dawn.” The selloff was driven by Democrats’ victory in the midterm elections and questions about what the result meant for the AI trade, which had powered market gains over the previous three years. Voters strongly opposed data center construction in their communities, and Democrats’ control of both chambers of Congress was expected to bring hearings scrutinizing AI development. The rotation out of semiconductor stocks turned into a broad selloff, with all 11 S&P 500 sectors declining. Information technology led losses, falling as much as 7%. The tech-heavy Nasdaq 100 dropped 5.9%, wiping out more than $2 trillion in market value. The Philadelphia Stock Exchange Semiconductor Index, known as the SOX, fell more than 10% and was on track for its worst daily performance since the market was hit by the COVID-19 pandemic in March 2020.