U.S. Tech Selloff Fuels More Selling as Buyers Stay on the Sidelines

According to ChainCatcher citing Bloomberg, Thursday’s U.S. tech selloff appeared driven by market positioning rather than a collapse in macroeconomic fundamentals, with long liquidations adding to selling pressure and little sign of buyers entering. The Nasdaq fell more than 5%, the S&P 500 dropped over 4%, and the Dow Jones Industrial Average declined more than 5%. Every S&P 500 constituent closed lower, led by technology stocks. Concern about stricter AI regulation grew after Democrats won control of Congress in the U.S. midterm elections. The Goldman Sachs Most Shorted Information Technology Index fell about 10%, its biggest one-day drop since January 2025, and touched its lowest level since March. Bloomberg analysts said the combination of long positions being unwound and crowded shorts was a particularly risky market structure. Forced selling and margin calls may intensify declines, while index rebalancing has added pressure, including to companies operating under the neocloud business model. David Bahnsen, chief investment officer of The Bahnsen Group, said technology valuations remained high despite Thursday’s losses and pointed to the S&P 500’s concentration in technology-related stocks as a source of market vulnerability. He recommended looking at defensive sectors such as consumer staples and energy. The article said positioning resets can take days to confirm and that trading desks showed few signs of dip-buying. Continued CTA selling, relative weakness in defensive stocks, and heavier volume on declines than on rebounds were cited as signs of a positioning-driven pullback rather than a systemic recession-led crash. The U.S. two-year Treasury yield fell more than 10 basis points on Thursday. Year-end positioning adjustments under a capital-preservation stance could continue into mid-November.