Funds in the U.S. stock market are pulling out of most industries but continue to pour into tech stocks. I previously wrote about how U.S. retail investors have recently started reducing their purchases of individual stocks, with some even showing net selling, while maintaining relatively stable net buying of ETFs. At the time, my assessment was that retail investors weren’t truly leaving the U.S. stock market but were instead lowering their risk by shifting from chasing individual stocks to betting on the overall market’s continued rise. Recent data from BofA further supports this view. Over the past week, BofA clients had a net purchase of approximately $3.8 billion in U.S. tech stocks, marking the second-largest single-week buying volume in history. However, at the same time, 7 out of 11 sectors experienced net selling, with all U.S. individual stocks combined showing a net sell-off of $2.4 billion. The industrial sector saw a net sell-off of about $1.9 billion, communication services $1.8 billion, financials $1.4 billion, and healthcare $1.3 billion. In other words, the overall U.S. stock market hasn’t seen a broad influx of funds; instead, buying activity is increasingly concentrated in tech stocks. This aligns with the retail investor behavior I discussed a few days ago. Retail investors are reducing positions in high-volatility individual stocks and shifting more money into ETFs, while another portion of funds is actively concentrating individual stock positions in tech companies. The end result is quite similar: funds are increasingly flowing toward the top companies with the highest index weights, best liquidity, and strongest market consensus. So, the U.S. stock market may now exhibit a noticeable trend: the indices themselves remain strong, but a large number of stocks beneath the indices aren’t receiving the same level of funding support. When retail investors buy index ETFs, new funds are allocated to large-cap companies based on their weight. Meanwhile, active funds are reducing positions in industries like industrials, financials, and healthcare, while concentrating purchases in tech stocks. Both streams of capital ultimately reinforce the buying activity of the same group of large-cap stocks. This also means that judging the strength of the U.S. stock market solely by looking at the S&P 500 or Nasdaq may become increasingly misleading. The indices can continue to rise, but market breadth may simultaneously deteriorate, leaving small-cap stocks, non-tech sectors, and previously popular stocks driven by retail FOMO with less incremental funding. As long as top companies continue to deliver favorable earnings reports, their stock prices may keep rising, and the indices can remain strong. However, if tech stocks start to see significant profit-taking, and other sectors lack sufficient funds to pick up the slack, index volatility could be further amplified. South Korea’s stock market has already given us the best example of this! @Gate Crypto, U.S. stocks, Hong Kong stocks, Korean stocks, gold, CFDs, prediction markets—all in one platform for trading.