Written by Nell McKenzie
LONDON (Reuters) – Global hedge funds sold tech stocks at the fastest pace in nearly eight months in the week to February 23, according to Goldman Sachs, just as Nvidia’s latest results led to gains in tech stocks. It piled up bets on the sector just as it stimulated it.
Hedge funds’ selling of tech stocks ranked among the highest in five years, according to a Goldman Sachs report released on Friday and confirmed by Reuters on Monday.
Stock indexes, including the tech-heavy Nasdaq, rose to record highs on optimism about artificial intelligence. Chipmaker Nvidia increased its stock market value by $277 billion on Thursday, the biggest single-day gain on Wall Street ever, after a better-than-expected quarterly report.
But in a sign that the tide is changing, there are now twice as many hedge funds with short bets on tech stocks falling as there are with long positions, according to Goldman Sachs. It is said that there is.
Hedge funds placed short bets on stocks of tech companies across all sectors. The bank said it exited long positions and added short punts in manufacturing and service equipment for the semiconductor industry, high-tech hardware, storage and IT services.
Speculators placed short-term bets on software companies, it added.
However, a separate note from Goldman Sachs said traders remained reluctant to completely exit positive positions in tech. This marks the highest value of Nvidia’s call options in two years.
These are derivative bets that put traders long only if the stock price exceeds a certain price threshold, and are a way to express a positive position in the stock, but only if the stock price rises to a certain point.
Goldman Sachs’ first note showed speculators were generally shorting U.S. stocks, the biggest net short interest in the region’s stock market in five weeks.
Sustained price increases by U.S. service sector companies have highlighted the tenacity of inflation, dampening expectations for rate cuts in 2024 and dampening hopes for a soft landing.
Traders ditched tech, health care and industrial stocks and replaced them with companies that make products that people buy every day, making consumer staples the biggest hit in the past 10 weeks, according to Goldman Sachs. It is said that the company purchased
These included shares in companies related to distribution, retail, beverages and household products, but not tobacco, it added.
Regulators around the world are increasing their scrutiny of e-cigarettes, potentially creating problems for some of the big tobacco companies that make them.
In December 2023, the World Health Organization (WHO) urged governments to treat e-cigarettes like cigarettes and ban all flavors.
(Reporting by Nell Mackenzie; Editing by Dhara Ranasinghe and Andrew Heavens)