Economy 4 min read By Callum Montgomery
Global Stocks Rebound as Investors Buy the Dip and Rotate Out of Tech
Equity markets recovered after a sharp sell-off in technology shares, with investors buying the dip and shifting into non-tech sectors. Fed Chair Kevin Warsh's IMF remarks eased rate-rise fears, while energy stocks hit a 50% year-to-date gain.
Global stock markets steadied on Thursday after a bruising two-day sell-off in technology shares, as investors bought the dip and rotated into non-technology sectors. The rebound was broad-based, with the equal-weight S&P 500 — a measure that reduces the influence of mega-cap tech names — climbing 1.36%, while the headline S&P 500 added 0.33%. The tech-heavy Nasdaq was flat.
Market breadth was notably strong. According to Jim Reid of Deutsche Bank, 378 names in the S&P 500 finished higher on the day. The index remains within 1% of its record high, suggesting that the recent turbulence has done little to dent the broader bull market. Futures pointed to further gains before the New York open, with S&P 500 futures up 0.42%.
The trigger for the earlier sell-off was a wave of drama and speculation surrounding CoreWeave's debt, which weighed heavily on technology stocks. But the selling appears to have run its course, at least for now. «The selling in tech has been stopped in its tracks, while the rotation into other sectors continues,» said Chris Beauchamp, chief market analyst at trading platform IG. «Tech stocks aren't out of the woods yet, but rotation of this kind is just what investors need to see, even if it is a deeply painful experience for tech fans.»
Investors also took comfort from remarks by Federal Reserve Chair Kevin Warsh at the International Monetary Fund meetings. Warsh did not signal an interest rate rise in October, and futures markets now price an 85% probability that the Fed will hold rates steady later this month, according to CME FedWatch. «With Federal Reserve Chair Warsh refusing to give forward guidance on policy at the IMF meetings — then giving forward guidance of a sort — Warsh failed to sound hawkish,» said Paul Donovan of UBS. «The word of Warsh carries relatively little weight, but this chimes with Fed President Williams's earlier remarks. Expectations for an October rate increase are fading.»
The global picture was similarly upbeat. In Europe, the Stoxx 600 rose 0.46% in early trading, while the UK's FTSE 100 was flat before lunch. In Asia, South Korea's KOSPI jumped 2.05%, Japan's Nikkei 225 gained 1.39%, India's Nifty 50 added 0.36%, and China's CSI 300 edged up 0.11%.
Commodities and digital assets were mixed. Brent crude traded at $105 per barrel, while Bitcoin stood at $82,101.
One of the standout stories of the year has been the energy sector. Energy stocks in the S&P 500 are up 50% year-to-date, according to Bespoke Investment Group, making it the first official sector in the index to reach that milestone. The rally has been buoyed by demand from artificial intelligence data centres and rising oil prices. Bespoke noted that this year's surge ranks fifth among all 50% sector gainers since 1990.
The rotation out of technology and into other sectors reflects a broader reassessment of risk. While AI-related spending continues to underpin demand for energy and infrastructure, investors are increasingly wary of stretched valuations in the tech space. The CoreWeave debt episode served as a reminder that the AI trade is not without its leverage risks.
For now, the mood is one of cautious optimism. The equal-weight index's strong performance suggests that the recovery is not solely dependent on a handful of large technology companies. If the rotation continues, it could signal a healthier market environment in which gains are shared more broadly across sectors.
Still, analysts caution that tech stocks remain vulnerable to further volatility, particularly if upcoming economic data or Fed communications shift rate expectations. The coming weeks will be crucial in determining whether this rebound marks a lasting stabilisation or merely a pause in a deeper correction.
8
