Hedge funds sold tech for five months. So who kept stocks afloat? You and your ETFs
The Nasdaq 100 shed 6.4% in a single day, while companies in the index reported earnings growth of 31%. It wasn’t earnings that drove prices down, but professionals who were forced to sell. And for months, the buyers on the other side were ordinary investors’ index funds.
Key points
The Nasdaq 100 shed 6.4% in a day, even as companies in the index reported their strongest earnings growth in three quarters.
Hedge funds have been reducing their exposure to tech since June—the longest such stretch in more than fifteen years.
While professionals sold for five months, the index kept rising—the buyers on the other side were the same all along.
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Funds were buying last week, but the data show it was a very different kind of buying than it seemed.
Your ETF lost 6.4% in a day. Yet the companies in it earned 31% more
On Thursday, November 5, the Nasdaq 100 shed 6.4% in a single session. It was its worst day since March 2020, and roughly $2.3 trillion in market value vanished. The semiconductor index lost more than 12%, the S&P 500 fell 4.36% to 7,353.73 points, its biggest drop since the tariff shock in April 2025, and the Nasdaq Composite closed down 5.5%, more than 10% below its October record—officially in correction territory.
Now for the other half of the picture. That same week, FactSet published its preliminary earnings-season tally: 88% of S&P 500 companies had reported, 84% of them beat earnings estimates, and aggregate earnings growth stood at 31.4% year over year. That marks the third consecutive quarter of growth above 25%.
These two things don’t add up. Companies are earning more than ever, yet their stocks had their worst day in six years. The explanation isn’t in the financial statements, but in who held the shares and why they had to sell. For owners of index ETFs, where tech makes up the largest weighting, this is an important distinction: “companies are doing worse” and “someone has to sell” are two entirely different problems with entirely different outcomes.