$22 billion in selling from leveraged ETFs the next shoe to drop for megacap tech stocks

As we await further twists and turns in the tariff saga that’s rocked global markets, the damage that’s already been done promises to cause even more damage.

JPMorgan analyst Bram Kaplan noted that because of today’s rout, ETFs that use leverage to juice their returns are going to be big sellers as we approach the end of the day.

“Levered ETFs need to sell ~$5 billion per 1% market move to rebalance. As such, we estimate these funds have ~$22 billion of equity exposure to sell into the close today, ~75% of which is in tech-related exposures (e.g. NDX, the broad Tech sector, and Semiconductors), based on market levels at mid-day,” he wrote.

Using an expansive definition of “midday,” major indexes are flat to down since Kaplan’s calculations.

Many of the popular ETFs that utilize leverage track major indexes, like SPDR S&P 500 Trust and Invesco QQQ Trust, but some are tied to stocks like Nvidia, Tesla, industry groups like chip stocks, or the tech sector as a whole.