Hedge funds sold U.S. stocks at a pace not seen since early January, marking a significant shift in investment behavior after five straight weeks of net buying.
This shift in momentum was highlighted in a report from prime brokerage Goldman Sachs, which noted that the sell-off is consistent with recent positive signs of economic growth and the Federal Reserve’s strong stance indicating that interest rates could remain elevated for an extended period. .
Both macro products, including indices and ETFs, and individual stocks saw net selling, according to the report.
Last week saw macro net sales for the first time in six weeks, while individual stocks saw net sales for the third week in a row, representing the highest pro forma net sales seen this year.
Selling activity was widespread across all 11 U.S. sectors in the week ending May 24, with declines led in industrials, information technology, financials, energy, materials and real estate. Cyclical sectors in particular saw their largest notional net sales since December.
The industrial sector was particularly hard hit, posting 11 straight sessions of net selling. The sector, which includes machinery, ground transportation, professional services and passenger airlines, saw its strongest net sales of any two-week period in more than a decade.