US equity funds experienced net outflows estimated between $8.5 billion and $9 billion for the week ending June 24, 2026, marking the first capital flight since March [1, 2, 3]. Technology and AI-focused funds were the main drivers, with record weekly withdrawals of approximately $9.3 billion [1, 2, 3]. This reversed a sharp inflow the prior week, when tech funds received a record $19.2 billion of new money [2].
Market sentiment has deteriorated amid a 14% drop in the 'MAG 7' technology ETF since May, breaking key psychological support levels [2]. Bank of America’s chief equity strategist Hannet said the reversal "reflects worsening market tone, evident from the loss of momentum in the seven major tech giants (Mag 7)" and suggested the outflows may signal the start of a "summer risk-off wave," especially with inverted US Treasury yield curves also pressuring stocks [2].
Investors are shifting focus away from AI mega-cap stocks toward cyclical sectors like semiconductors, small caps, homebuilders, and real estate investment trusts, anticipating the November US midterm elections will shift government priorities to domestic issues such as affordability [2].
US stock indexes fell sharply on June 26 amid continued tech selling pressure despite some positive earnings, such as from Micron Technology. The Dow Jones dropped 200.92 points (0.39%), the S&P 500 lost 40.73 points (0.55%), and the Nasdaq declined 221 points (0.87%). The Philadelphia Semiconductor Index fell 621 points, or 4.45% [3].
Asian markets also reacted strongly to the US tech selloff and leverage-driven selling. South Korea's KOSPI and Taiwan's stock market experienced significant drops on June 26. Taiwan's market plunged 1,683.5 points, or 3.64%, posting its third-largest single-day point fall ever [3].
Taiwanese financial media chairman Hsieh Chin-ho linked the sharp moves to heavy retail participation in leveraged ETFs in South Korea. He warned that "official measures to reduce leverage triggered chain selling," advising Taiwanese investors to be cautious of the risks from high leverage trading [3]. Wanbao Investment Director Cai Ming-zhang noted emerging risk signals in the AI supply chain warranting investor vigilance [3].
Apple’s announcement of global price increases for products including Mac and iPad, citing rising costs for chips and memory, added to downward pressures on technology shares [3]. Geopolitical tensions intensified risk aversion after a tanker incident in the Strait of Hormuz was reported on June 26 [3].
The market will closely watch developments ahead of the November US midterm elections, as investors continue reallocating capital in line with anticipated policy shifts and earnings trajectories.
