Goldman Sachs: Hedge funds "surrender-style" sell-off industrial stocks, holdings continue to rotate to energy and materials stocks
According to Goldman Sachs data, industrial stocks were the most heavily sold sector in the US stock market last week. In the two weeks since July 11th, the total amount of closures in industrial stocks in US dollars has set a historical record. Energy and materials were the most bought sectors last week and in the past four weeks, with chemicals, oil, natural gas, consumable fuels, energy equipment and services being the most bought sub-sectors last week
According to Goldman Sachs' brokerage data report, hedge funds are rapidly reducing their bets on industrial stocks and shifting towards the commodities sector, particularly energy and materials.
Specifically:
- Last week, industrial stocks experienced the most severe net selling among US stocks.
- In the two weeks since July 11, the total amount of unwinding in industrial stocks in US dollars has set a record for this two-week period, with Goldman Sachs reporting that the related selling can be described as "surrendering."
- Looking back further, hedge funds have been selling industrial stocks since May, making it one of the sectors with the largest net selling pressure in the US in the second quarter.
This earnings season, industrial companies have had mixed reports: American Airlines and UPS have lowered their profit forecasts for this year, signaling weakening demand; while General Electric reported strong performance, benefiting from robust demand for engines and maintenance services. Currently, the market is awaiting Caterpillar's earnings report, as the company is seen as a barometer of the global industrial economy.
Industry insiders generally believe that due to the diverse nature of companies in the industrial sector, it is difficult to identify the specific forces behind the selling. Some mention that the upcoming US presidential election has intensified policy change risks, increasing uncertainty, so some investors are selling to take profits. In addition, there are concerns that if Trump is re-elected, it may bring inflationary pressure and impact long-term interest rates.
Hedge funds continue to rotate their holdings into stocks related to commodities, with energy and materials being the industries with the highest net purchases in the US last week and over the past four weeks. Chemicals, oil, natural gas, consumable fuels, as well as energy equipment and services were the sub-industries with the highest net purchases last week