Tech Meltdown Deepens — But the Russell 2000 Suddenly Comes Alive

Tech remained the weak link, with continued selling in AI and semiconductor names pulling the Nasdaq Composite ($COMPQ) down 1.21% and the Nasdaq 100 ($NDX) off 1.20%, extending their losing streaks to four and three sessions, respectively. That pressure spilled into the broader benchmarks as the S&P 500 ($SPX) slipped 0.83% and the Dow Jones Industrial Average ($INDU) fell 1.07%, both logging a fourth straight decline. The Russell 2000, however, managed to break the pattern, rising 0.31%, offering a modest boost to breadth after a couple of sessions of more broadly distributed selling..

The lead story was once again tech, particularly semiconductors and AI-adjacent names. The S&P 500 Information Technology sector (XLK) fell 1.6%, its second consecutive heavy decline, and chip stocks were hit hardest: Nvidia, Broadcom, Taiwan Semiconductor, ASML, Samsung, and AMD all traded lower, while the Semiconductor ETF SMH slid just over 2%. AI-themed products like BOTZ and growth/innovation proxies such as ARKK, IGV, SKYY and BUG were also firmly in the red. The market is no longer just “taking profits” in AI leadership; it’s actively testing how much of the narrative was priced for perfection.

Under the surface, the style and factor tape showed a clear rotation out of mega-caps and into smaller, cheaper names. Mega-cap growth barometers QQQ and QQQM fell 1.2% while SPY dropped 0.8%, but equal-weight and value held up far better: RSP finished slightly positive and SPLV was flat to modestly higher. Small-cap and mid-cap value were the day’s quiet winners, with XSLV, MDYV, XMLV and RWK all green. IWM’s gain and micro-cap strength via IWC (+0.85%) contrasted sharply with the four-day losing streaks in the S&P 500, Russell 1000 (IWB) and Wilshire 5000 ($FTW5000). The one big caveat: the S&P 600 small-cap index (SML) remains on a five-day losing streak, so the intraday pop hasn’t repaired the longer-term damage.

Sector performance told the same story of defensive rotation and growth unwind. On the upside, Energy (XLE +0.78%) led again, supported by strength across exploration & production (XOP), integrateds and services (OIH, IEO) despite only modest moves in crude. Health Care (XLV +0.61%), Communication Services (XLC +0.59%), Consumer Staples (XLP +0.48%), Real Estate (XLRE +0.36%) and, barely, Materials (XLB +0.09%) all finished in the green as investors hid in cash-flow stability and real-asset exposure. At the bottom of the board, Consumer Discretionary (XLY –1.81%) and Technology (XLK –1.59%) were the clear laggards, with weakness in retail, high-multiple consumer names and anything tethered to the AI boom. Industrials (XLI –0.44%), Utilities (XLU –0.34%) and Financials (XLF –0.17%) slipped but avoided the kind of punishment seen in semis and discretionary.

Breadth data confirmed that the damage is now broad, not just a tech story. Only about 27%–33% of stocks across major indices sit above their 20-day moving averages, with the NASDAQ and S&P 600 near the bottom of that range. Roughly a third of names are above their 50-day, and even 100-day readings for the S&P 500 and NASDAQ have rolled over into the low 40s and mid-30s, respectively. Long-term 200-day readings still look “okay” on the surface—around 54% for the S&P 500 and 51% for the NASDAQ 100—but the direction of travel is clearly down. The Dow Industrials, with 63% of components above the 200-day, remain the lone holdout, more a quirk of its 30-stock composition than evidence of real market health.

Sentiment, interestingly, looks like it peaked right into this drawdown. Citi’s Panic/Euphoria index recently printed 0.79, nearly double the 0.41 “euphoria” threshold and not far from prior speculative extremes, even as the S&P 500 has now dropped about 3.75% over the past four sessions—the largest four-day decline since April. Meanwhile, CNN’s Fear & Greed Index has slid into “extreme fear.” In other words, positioning and attitude were euphoric just as price started breaking, and now the punishment is catching up in classic post-euphoria fashion.

Cross-asset price action leaned risk-off, with one important exception: crypto. Bitcoin added 0.68% and Ethereum jumped just over 3%, suggesting some speculative capital is rotating from crowded AI/mega-cap trades into digital assets. The broader commodity complex was softer: the CRB Index (CRB) slipped 0.23%, crude oil dipped 0.3%, and natural gas dropped more than 4%, extending its sharp slide on warm-weather demand concerns and comfortable storage levels. Precious metals gave back recent gains as gold fell about 0.9% and silver lost 0.65%, while copper weakened alongside worries about global manufacturing and China. The U.S. dollar was essentially unchanged, offering neither a headwind nor a tailwind.

On the news front, macro and policy headlines added texture but didn’t fundamentally change the risk narrative. Home Depot (HD) missed earnings by $0.10 and guided fiscal 2026 EPS and revenue below consensus, reinforcing the idea that the home-improvement cycle remains sluggish and that housing-related discretionary demand is still under pressure. Labor data were mixed: initial jobless claims ticked up to 232,000 and ADP said private employers shed an average of 2,500 jobs per week into early November, hinting at a cooling but not collapsing labor market. Factory orders rose 1.4% in August, ahead of expectations, but shipments slipped slightly, and the NAHB Housing Market Index remained depressed at 38.

Washington and global policy headlines supplied their usual background noise. President Trump said he has effectively made his choice for the next Fed chair and reiterated his desire to move Jerome Powell aside, while also backing a healthcare plan that would redirect ACA subsidies directly to consumers. Fed Governor Barr warned against weakening bank supervision, arguing that pressure to ease exam standards poses “real dangers.” Saudi Arabia’s Crown Prince pledged to lift U.S. investment to $1 trillion, while U.S. officials signaled support for advanced chip sales and F-35 jets to the kingdom. In Europe, the UK’s Prudential Regulation Authority raised deposit-insurance limits, and in Japan officials voiced “deep concern” about FX volatility as government bonds sold off ahead of new fiscal measures.

Put together, it was a session defined less by any single headline and more by positioning and rotation. The AI and semiconductor complex is undergoing a proper de-rating, mega-cap tech is finally giving ground, and leadership is migrating—at least for now—toward energy, defensives, and smaller value-oriented names. With breadth deteriorating, euphoria readings still elevated in the rearview mirror, and four-day losing streaks across the major benchmarks, the burden of proof has shifted firmly onto the bulls. Until tech stabilizes and breadth improves, rallies are likely to be treated as exits rather than fresh invitations.