The US stock earnings season is coming! Hedge funds are urgently adjusting their positions: cutting bank stocks and rushing to buy consumer staples stocks
Hedge funds have sold off bank stocks for the second consecutive week ahead of the earnings season for U.S. stocks, while buying consumer staples at the fastest pace in nearly two years. A Goldman Sachs report shows that investors have sold long positions in banks and financial services companies, while increasing short positions. At the same time, consumer staples stocks are favored for their stability during economic downturns. Analysts warn that if tariffs are raised again, it could trigger concerns about an economic recession
According to the report from Goldman Sachs, ahead of the earnings season for U.S. stocks this week, hedge funds have sold off bank stocks for the second consecutive week while buying consumer staples at the fastest pace in nearly two years.
This week, the momentum of U.S. stocks reaching historical highs may face challenges as major banks begin to release their second-quarter earnings reports, along with the U.S. consumer price data for June being released on Tuesday.
Data from Goldman Sachs' prime brokerage division shows that last week, hedge funds sold off long positions in major U.S. banks and global financial services companies for the second consecutive week.
Goldman Sachs stated that these investors sold long positions in European financial stocks and increased their short positions.
Goldman Sachs noted that banks, financial services companies, and insurance companies were net sold, while trading and consumer finance companies were net bought.
Meanwhile, data shows that speculators heavily entered the worst-performing sector of the U.S. stock market last week—consumer staples.
Consumer staples include products such as beverages, food, and tobacco, which are relatively less affected during economic downturns.
Analysts expect that the upcoming series of quarterly reports will reveal the impact of the tariff policies implemented by U.S. President Donald Trump on corporate finances and the overall economy.
Deutsche Bank analyst Henry Allen stated, "If tariffs are raised again on August 1 and the employment report is disappointing, concerns about a U.S. economic recession could easily reignite."
Goldman Sachs indicated that consumer staples were the most net bought stock sector in July.
Global hedge funds engaged in systematic trading in the stock market fell 1.8% this month but are still up slightly over 10% for the year. Stock-picking funds have performed steadily so far this month, with a year-to-date return of 6.6%
