admin Hedge Funds Increase Short Positions Despite Robust U.S. Jobs Report – News and Statistics
Jan 13, 2025
Global hedge funds have significantly increased their short positions against U.S. stocks in the past week leading up to January 9, with insights detailed in a recent Reuters article. This comes in anticipation of a substantial U.S. jobs report, which subsequently triggered a broader sell-off on Wall Street. According to data from the IndexBox platform, the new employment figures were particularly robust, with the U.S. Labor Department’s report showing job growth rising to 256,000 in December, the highest since March, and the unemployment rate dropping to 4.1%.
The market reaction to these stronger-than-expected employment news was swift, with the S&P 500 index falling by 1.54% on Friday, effectively wiping out all its gains for 2025. Morgan Stanley noted that hedge fund managers ramped up their shorts, particularly in sectors like staples, software, financials, and healthcare, while scaling back on long positions in communication services. Despite this bearish sentiment in the U.S., there was continued interest in European and Asian equities.
Goldman Sachs observed a similar trend, highlighting that the shift towards short positions was most pronounced in North America and Europe. Jon Caplis, CEO of PivotalPath, linked this strategy to current uncertainties surrounding the Federal Reserve’s outlook on interest rates and critical data releases, such as the upcoming consumer price index.
While most sectors faced increased bearish sentiment, the technology, media, and telecommunications (TMT) sector bucked the trend, with hedge funds adding to these positions at the fastest rate in three months, as reported by Goldman Sachs. Nevertheless, technology stocks saw significant declines on Friday, dropping 2.23%, following financials and real estate. Analysts are closely watching upcoming earnings reports from major tech companies starting after Martin Luther King Jr. Day on January 20.
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