By Carolina Mandl
NEW YORK (Reuters) – Global hedge funds added more bets against U.S. stocks over the past week through Jan. 9, ahead of a spectacular U.S. jobs report that sparked a sell-off on Wall Street. Morgan Stanley (NYSE 🙂 and Goldman Sachs said in notes on Friday.
Friday’s closely watched U.S. Labor Department’s employment report showed job growth accelerated to 256,000 jobs in December, the most since March, while unemployment fell to 4. 1%.
The better-than-expected jobs data sent stocks soaring, sending the stock down 1.54% on Friday and erasing all of its 2025 gains.
Morgan Stanley said portfolio managers increased short positions – or bets that stocks will fall – in sectors such as commodities, software, financials and healthcare in the days before the jobs report, while selling long positions in communication services. .
Still, the bank said hedge funds bought European and Asian stocks during the same period.
Goldman Sachs also said short positions outweighed long additions to portfolios, but saw this trend across all regions, led by North America and Europe.
“We’ve seen a rotation where managers have been taking profits, selling their long positions and then adding to short positions,” said Jon Caplis, chief executive of hedge fund research firm PivotalPath. He said the move is also related to the Federal Reserve’s tougher stance on interest rate cuts and the release of big data, such as Wednesday’s consumer price index.
One exception was the technology, media and telecommunications (TMT) sector, Goldman Sachs said, as hedge funds added it at the fastest pace in three months.
Technology stocks were among the hardest hit on Friday, falling 2.23%, behind financials and the real estate sector. Big tech companies begin reporting earnings after Martin Luther King Jr. Day, January 20.
As two major global brokers, Goldman Sachs and Morgan Stanley track their hedge fund clients’ portfolios to indicate positioning and flow trends.