Goldman Sachs said that in the week ended Feb. 23, global hedges** sold off U.S. technology stocks at the fastest pace in nearly eight months, when Nvidia (NVDAUS) latest earnings report drove tech stocks higher. According to a report from Goldman Sachs, hedged** sold the most tech stocks in the past five years. In a separate report, Morgan Stanley said technology stocks were the sector with the most net sell-offs last week.
Stock indexes, including the tech-heavy Nasdaq, have hit all-time highs due to optimism about artificial intelligence (AI). On Thursday, chipmaker Nvidia added $277 billion in market value after it reported better-than-expected quarterly earnings, the largest one-day increase in U.S. stock history.
But Goldman Sachs said that there are currently twice as many hedges** for shorting tech stocks as there are for longs**, suggesting that market sentiment may be shifting.
Hedging is making short bets on technology companies across the industry. These exited long positions, increasing short bets on manufacturing and service equipment, technology hardware, storage, and IT services companies in the semiconductor industry.
Goldman Sachs said these speculators increased their short bets on software companies, while Morgan Stanley said it was hedged to short semiconductor and tech hardware companies.
However, another report from Goldman Sachs said traders were still reluctant to cut off long positions in tech stocks entirely. Nvidia's call options hit a two-year high.
A previous Goldman Sachs report said that speculators are still generally shorting the United States, causing the largest net sell-off in the United States in five weeks.
The persistence of U.S. service companies highlighted the stickiness of inflation and delayed expectations of a rate cut in 2024, undermining hopes for a soft landing for the economy.
Goldman Sachs said traders sold technology, healthcare and industrials stocks in favor of consumer staples stocks.
Morgan Stanley said it hedged the sell-off from Monday to Wednesday, but changed its mind after Nvidia triggered tech stocks last Thursday and bought back all that had been sold before, mainly industrials, materials and financials.