Decreasing interest rates are anticipated to stimulate industrial spending, facilitating cheaper borrowing for companies and enabling consumers to purchase technology products, which could enhance the stock values of these firms.
The Fed’s initial rate cut in four years propelled U.S. stocks upward last week, with the S&P 500 index (.SPX) closing 1.15% higher on Friday, as recession concerns subsided and investors began to consider the effects of relaxed monetary policy.
Hedge funds established nearly three times more long positions anticipating a rise in information technology stocks than those betting against them, according to the prime brokerage note.
Purchases in semiconductor and related equipment firms surpassed sales in tech hardware, such as computers, monitors, and hard drives, as stated in the Goldman Sachs note.
Additionally, hedge funds moved away from their short positions and increased long investments in interactive media and entertainment companies.
A short position anticipates a decrease in an asset's value.
Currently, the broader technology and media sector accounts for nearly one-third of total U.S. net portfolio exposure.
In contrast, consumer products represented the most significant sales on Goldman Sachs' prime brokerage book.
For the first time in four weeks, selling outpaced buying in U.S. consumer discretionary stocks like hotels and restaurants, leading to the largest net selling in a year for the sector, as noted.
Gross leverage, indicating total hedge fund borrowing and investments, reached approximately 278%, among the highest levels recorded this year.
