Goldman Sachs: As US stocks hit new highs, hedge funds accelerate withdrawal from technology stocks and shift to consumer staples stocks
Goldman Sachs report shows that as the S&P 500 index reaches a historic high, hedge funds are selling technology stocks at the fastest pace, primarily focused on the North American and European markets. Hedge funds are more inclined to unwind long positions, leading to a widespread sell-off of technology stocks, while consumer staples stocks have become the sector with the highest net buying. The price-to-earnings ratio of the S&P 500 index is approaching a five-month high, with investors paying attention to changes in long-term interest rates
According to a client report from Goldman Sachs, while the S&P 500 index reached an all-time high, hedge funds sold off technology stocks at the fastest pace in the past 12 months during the last week. Goldman Sachs pointed out that globally, hedge funds sold more technology stocks last week than any other sector, and these technology stocks are typically among the highest valued. Rather than shorting the sector (i.e., betting on a price decline), hedge funds preferred to unwind long positions and completely exit related trades.
Goldman Sachs stated that the outflows this week represent the largest scale observed since July 2024. The sell-off of technology stocks by hedge funds was primarily concentrated in the North American and European markets. Goldman Sachs noted that nearly all types of technology stocks were sold off, including semiconductor companies, software companies, and IT service companies.
Meanwhile, consumer staples stocks became one of the most net bought sectors by hedge funds in the U.S. stock market during the last week. Goldman Sachs mentioned that hedge funds have increased their positions in these stocks for the fourth consecutive week, almost entirely in long positions. The companies bought by hedge funds include those selling food, beverages, and personal care products.
Among the top ten constituents of the S&P 500 index, seven are technology stocks. Driven by strong performance in technology stocks, the index has risen approximately 28% since its low in 2025. During the same period, the Nasdaq Composite Index surged by 38%.
According to LSEG/Datastream data, as of last Friday, the forward price-to-earnings ratio of the S&P 500 index was 23.11 times, close to a five-month high. Florian Ielpo, macro head at Lombard Odier Investment Management, pointed out: "The valuation of U.S. stocks (such as price-to-earnings ratio) is currently 30% higher than the average level of the past decade, while the yield on 10-year Treasury bonds remains high and volatile. The future direction of the stock market may partly depend on the decline of long-term interest rates. However, we do not seem to have reached that stage yet."
