Hedge funds sold US equities at a rate not seen since early January, marking a significant shift in investment behavior after five consecutive weeks of net buying.
This change in momentum was highlighted in a report by Goldman Sachs' prime brokerage, which noted that the sell-off aligns with recent positive economic growth signs and a firm stance from the Federal Reserve, indicating that interest rates may stay elevated for an extended period.
According to the report, both macro products, including indexes and ETFs, and single stocks experienced net selling.
The last week marked the first time in six weeks that macro products were net sold, while single stocks saw their third consecutive week of net sales, posting the highest notional net selling observed so far this year.
The selling activity was widespread across all 11 US sectors for the week ending May 24, with industrials, information technology, financials, energy, materials, and real estate leading the downturn. The cyclical sectors, in particular, faced the heftiest notional net selling since December.
The industrial sector was notably impacted, experiencing net selling for 11 consecutive sessions. This sector, which includes machinery, ground transportation, professional services, and passenger airlines, saw the most significant amount of net selling over any two-week span in over a decade.