Key Takeaways
- • Goldman Sachs equities desk reported a sudden broad selloff on Thursday, with the Nasdaq Composite down 5.4%, the S&P 500 down 4.1%, and the Dow Jones Industrial Average down 3.2%.
- • According to a Goldman Sachs intraday note by partner John Flood, long-only institutional investors remained on the sidelines after heavy de-risking ahead of the midterm elections, leaving the market without buyers.
- • Hedge funds offloaded hyperscaler holdings in Microsoft, Amazon, Alphabet and Meta that they had purchased just a day earlier, while top-down macro selling dominated.
- • Trading volumes spiked well above 20-day averages: up 160% in SPY, 150% in SMH, 100% in QQQ and 75% in DRAM-related products.
- • Anxiety over physical infrastructure constraints contributed to the retreat in semiconductors, and a second straight day of heavy retail selling was observed.
Summary
U.S. equities experienced a sharp selloff on Thursday, with hedge funds continuing to sell technology positions, including the XLK technology sector ETF, and semiconductor holdings in the SMH ETF. Per the source article, anxiety over physical infrastructure constraints helped trigger a broad retreat across semiconductors. The Nasdaq Composite bore the heaviest losses, falling 5.4%, while the S&P 500 dropped 4.1% and the Dow Jones Industrial Average declined 3.2%.
The move followed one of the busiest trading sessions of the year, when markets rallied on the outcome of the midterm elections, which delivered a major victory for Democrats in both the Senate and the House of Representatives. Goldman Sachs' equities desk described a market that had suddenly lost buyers and was dominated by top-down macro selling. Long-only institutional investors remained frozen on the sidelines following heavy de-risking into the midterms, according to an intraday note written by Goldman partner John Flood.
The note also said hedge funds actively offloaded holdings in hyperscalers Microsoft, Amazon, Alphabet and Meta that they had bought just a day earlier. Volume spiked sharply relative to 20-day averages, rising 160% in the State Street SPDR S&P 500 ETF (SPY), 150% in the VanEck Semiconductor ETF (SMH), 100% in the Invesco QQQ Trust (QQQ) and 75% in DRAM-related products. Goldman also flagged a second consecutive day of heavy retail selling.
The move followed one of the busiest trading sessions of the year, when markets rallied on the outcome of the midterm elections, which delivered a major victory for Democrats in both the Senate and the House of Representatives. Goldman Sachs' equities desk described a market that had suddenly lost buyers and was dominated by top-down macro selling. Long-only institutional investors remained frozen on the sidelines following heavy de-risking into the midterms, according to an intraday note written by Goldman partner John Flood.
The note also said hedge funds actively offloaded holdings in hyperscalers Microsoft, Amazon, Alphabet and Meta that they had bought just a day earlier. Volume spiked sharply relative to 20-day averages, rising 160% in the State Street SPDR S&P 500 ETF (SPY), 150% in the VanEck Semiconductor ETF (SMH), 100% in the Invesco QQQ Trust (QQQ) and 75% in DRAM-related products. Goldman also flagged a second consecutive day of heavy retail selling.
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