Tech Stocks Tumble as Investors Rush to Energy and Emerging Markets
A major shift in global markets has seen investors pull capital out of US large-cap technology stocks, with capital one login activity surging. The movement has driven the strongest inflows into emerging markets in over ten years. Meanwhile, sectors like energy, utilities, and consumer staples have surged to record highs as money flows into new areas.
The rotation began in late 2025, with large-cap tech stocks falling back to levels last seen in September of that year. Despite this drop, defensive sectors such as utilities saw unprecedented trading activity, including historic call volume. Energy, in particular, absorbed substantial capital, pushing the sector to new peaks alongside industrials, materials, and consumer staples.
Even semiconductors, traditionally linked to tech, recorded gains during the shift. However, the heavy weighting of technology in major indices meant the broader market remained flat. The S&P 500 stayed nearly unchanged despite the massive reallocation, as non-tech rallies struggled to offset tech declines.
Internationally, the MSCI World Index lagged behind the S&P 500 in September and October 2025, with returns of 3.4% and 2.1% respectively, compared to the S&P's 3.6% and 2.3%. Yet, over the full year of 2025, the MSCI EAFE—covering developed markets outside the US—outperformed significantly, rising 31.9%. By early 2026, the MSCI World had gained 1.9% year-to-date, while the MSCI USA trailed at just 1.0%.
The market split has created stark contrasts, with large-cap tech under pressure while other sectors thrive. Emerging markets have benefited most, recording their highest inflows in a decade. The divergence suggests a lasting change in investor priorities, though the S&P 500's stability reflects the ongoing dominance of technology in stock market today performance.
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