Traders work on the floor of the New York Stock Exchange on September 16, 2026.
Gina Moon | Reuters
Analysts monitoring the shift away from riskier tech investments and into defensive stocks say the market is on “alert.”
Technology stocks, a major driver of stock price gains in recent years, have been markedly volatile in 2026. Concerns about artificial intelligence, particularly regarding capital expenditures, cash flow, debt, and circular financing, have led to multiple volatile events this year.
Pressure on the sector has increased after Democrats took control of Congress in last week’s midterm elections.
high tech industry on wall street Nasdaq Composite Index is up about 8.7% year-to-date as of the close on November 9th, but in October it lost 5.3% for the entire month, giving up some of its year-to-date gains. Index — home to Big Tech names including Nvidia, microsoft, alphabet and apple — Despite a recovery trend in recent days, November remains in the red and is down 0.7% for the month so far after falling into correction territory last week.
NASDAQ Composite Index performance over the past month
The Nasdaq isn’t the only tech-heavy index to have fallen sharply over the past month. Korean Kospi The index, which is heavily influenced by the semiconductor sector, fell 16.2% in October, and is down more than 8% since the beginning of the month.
The MSCI World Information Technology Index fell 7% in October and has fallen another 4.6% so far this month. MSCI’s US-only IT index has fallen 11.5% since October.
At the same time, stocks in the defensive sector rose broadly.
MSCI’s indexes, which cover the consumer staples, healthcare and utilities sectors – widely seen as more stable assets in the stock market during times of volatility and uncertainty – have all risen significantly over the past month.
Alastair Pinder, head of emerging markets and global equity strategist at HSBC, said in a note on Monday that recent moves in the stock market were “egregious and, in our view, excessive”.
“The market is already pricing in increased execution risk and delays in capital investment,” he said, referring to developments in artificial intelligence. “After a 45% downgrade since June, with US semiconductors trading at a 12-month forward P/E ratio of 13.5x, how much pain is there in pricing?”
He added that fundamentals generally appear to be healthy.
“The rotation to the defense seems extreme,” he said. “Walmart trades at 40 times forward earnings, near an all-time high, while NVIDIA trades at 13 times forward earnings, near an all-time low.”
Russ Mold, investment director at AJ Bell, said the stock market is “on alert, judging by the way investors are rotating their sector exposures.”
“These moves are important and will help stock pickers make decisions, keeping in mind the old adage that ‘bad stocks in good sectors outweigh good stocks in bad sectors,'” he said in a note Monday.
According to A.J. Bell’s analysis of 11 so-called “super sectors” in the S&P Global 1200, health care and consumer staples stocks have been the second-best performers after energy so far in the second half of 2026, benefiting greatly from the surge in oil prices following the U.S.-Iranian war.
According to the data, the IT sector went from being the best-performing sector in the first half of the year with an increase of 28.4% to being the worst-performing sector in the second half with a decline of more than 11%.
“Information technology has moved from the penthouse to the outhouse, from the best performing companies to the worst,” Mold said.
“Energy remains resilient, as do consumer staples and health care, but industrial goods are significantly weaker. These trends may reflect deep-seated concerns about the economic outlook next year and concerns that air is leaking from the AI ‘bubble.’”
