Tech Rout Triggers Late-2025 S&P 500 Slide as Traders Lock In Gains
A late-year tech profit-taking wave dragged the S&P 500 lower Monday, highlighting record sector concentration and setting the tone for 2026 portfolio rebalancing.
Tech Rout Triggers Late-2025 S&P 500 Slide as Traders Lock In Gains
NEW YORK—The final trading weeks of 2025 opened with a jolt Monday as the S&P 500 shed 1.8%, its steepest one-day drop since September, after investors rushed to pocket profits from a blistering tech rally that has dominated the year.
The Numbers
The broad index closed at 5,842, down 107 points. Heavyweights Apple, Nvidia and Microsoft led the retreat, shaving a combined 42 points off the benchmark. All eleven S&P sectors finished lower, but technology’s 3.1% tumble dwarfed every other group.
What Sparked the Selloff
After a 28% year-to-date surge—powered by artificial-intelligence capex and a resilient consumer—portfolio managers say the pullback was less a warning shot than a late-year portfolio rebalance.
“Clients are crystallizing gains before 2026 tax changes kick in,” said Priya Desai, equity strategist at Crestview Asset Management. “Nobody’s panicking; they’re ring-fencing profits.”
Tech’s Dominance Comes at a Cost
Tech now accounts for 32% of the S&P 500, the highest weighting on record. Some fund managers argue that concentration risk is prompting systematic rebalancing programs to dial down exposure.
- Apple fell 4.2%, its worst session since April.
- Nvidia dropped 5.7%, paring its 2025 gain to 86%.
- The VIX jumped to 21, doubling in a week.
Looking Ahead
With earnings season three weeks away and the Fed widely expected to hold rates steady in January, attention is shifting to corporate guidance for next year. “Markets have priced in Goldilocks,” said David Chen, senior portfolio manager at Horizon Capital. “Any hint of margin compression and we could see another round of profit-taking.”
Main Street’s View
Retail traders, who now represent 24% of daily volume, appear unfazed. Data from Vested Tracker show net buying of tech ETFs during Monday’s dip, suggesting many still view pullbacks as entry points.
Still, the sell-off served as a reminder that when crowded trades unwind, gravity works fast. The question heading into 2026 is whether tech’s fundamentals can catch up to its valuation.