Key Highlights

● Clients of a major bank pulled a record $14.8 billion out of single stocks.

● A separate figure showed net sales of $9.1 billion in US equities last week.

● About two of every three S&P 500 stocks rose, and the equal-weight index gained.

● Consumer staples posted their best day since April 2025.

Clients of a major bank pulled a record $14.8 billion out of single stocks, according to market data, a sign of caution as artificial-intelligence names came under pressure.

The figure, highlighted on Thursday, October 22, landed on a day when the Nasdaq Composite sank 694 points to 26,008.86, its steepest drop since June 5, and the S&P 500 fell 93.74 points to 7,663.43, its worst day since July.

Two sets of numbers

A separate figure showed net sales of $9.1 billion in US equities last week, led by institutional investors. The two numbers may come from different datasets, measuring different slices of client activity, so they should not be read as contradictory.

Both point in the same direction: money has been flowing out of individual stocks, with institutions leading the selling. Client flow data of this kind is watched on Wall Street because it can offer a window into what different groups of investors are actually doing with their money.

A defensive mood

The selling fits a broader picture of caution in investor positioning. A major bank's data showed hedge funds selling short roughly five shares for every one they bought, with short leverage near its most extreme level of the past five years. A weekly survey of individual investors also showed bears outnumbering bulls.

"The dominant market dynamic in recent weeks has been the unwinding of AI-related positions by hedge funds," one bank strategist said.

Thursday's selloff

The flow data came alongside a sharp selloff in AI-linked shares. Meta Platforms (NASDAQ:META) said on Wednesday that it expects 2026 capital spending of $135 billion to $145 billion and posted negative free cash flow of $2.12 billion. Lam Research (NASDAQ:LRCX) gave guidance slightly below consensus and flagged supply constraints.

Nvidia (NASDAQ:NVDA) was trading at $212.21 and was the single biggest drag on the S&P 500. The Philadelphia Semiconductor Index had its biggest one-day drop since June 23.

Still, the market was not uniformly weak. About two of every three S&P 500 stocks rose, and the equal-weight S&P 500 gained. Consumer staples posted their best day since April 2025, and health care hit a record high.

Where the money is going

Heavy outflows from single stocks do not necessarily mean investors are leaving the market entirely. Money can move into funds, bonds or cash. On Thursday, US Treasuries were a clear beneficiary: the 10-year yield closed back below a closely watched threshold for the first time since September 22.

"Treasuries rallied overnight as tech stocks came under pressure amid renewed AI valuation fears," one rates strategist said.

Some market watchers see heavy selling and gloomy sentiment as a possible contrarian sign. One commentator argued that "buying the dip here has [a] pretty good record of working," while another wrote: "Maybe we'll finally get a change in sentiment." Others are more cautious, noting that "it will take more than one or two days to change the trend."

Next flow reading and the October 28 events

Investors will watch the next round of client flow data for signs of whether the selling is accelerating or easing. Next week's busy calendar could shift positioning further.

Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) report on October 28, alongside the Federal Reserve's rate decision. Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) follow on October 29, along with third-quarter GDP and September PCE data.