Hedge funds increased bear bets ahead of a downbeat US jobs report on Friday, banks told Reuters
Author: Carolina Mandl
NEW YORK (Reuters) – Global hedge funds added more bets against U.S. stocks in the past week to Jan. 9, ahead of a big U.S. jobs report that sparked a selloff on Wall Street, Morgan Stanley (NYSE: ) and Goldman Sachs, said in notes on Friday.
A closely watched U.S. Labor Department jobs report on Friday showed job growth accelerated to 256,000 in December, the most since March, while the unemployment rate fell to 4.1%.
Warmer-than-expected jobs data sent stocks soaring, sending them down 1.54% on Friday and erasing any gains in 2025.
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 ahead of the jobs report, while selling long positions in communications services.
However, the bank said hedge funds bought European and Asian stocks in the same period.
Goldman Sachs also said short positions outpaced longs added to portfolios, but noted this trend across all regions, led by North America and Europe.
“We’ve seen a rotation where managers have taken profits, sold their longs and then added to their short,” said Jon Caplis, chief executive of hedge fund research firm PivotalPath. He said the move was also linked 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 to it at the fastest pace in three months.
Shares in the technology sector were among the worst hit on Friday, falling 2.23%, behind financials and real estate. Big tech companies start reporting earnings after Martin Luther King Jr. Day. January 20.
As the two largest global prime brokers, Goldman Sachs and Morgan Stanley monitor their hedge fund clients’ portfolios to indicate positioning and flow trends.
