With appetite for equities subsiding last week after a 20% rally this year on the back of investor excitement over artificial intelligence, hedge funds are ramping up their bets against stocks, according to a report by Bloomberg.

The report cites data from Goldman Sachs' prime brokerage division as revealing that net leverage — a gauge of risk appetite that measures long versus short positions — fell by 4.2 percentage points to 50.1%, the biggest week-on-week decline in portfolio leverage since the depths of the pandemic bear market.

Data from JPMorgan Chase & Co also reveals that hedge funds tracked by the firm have upped their short selling, while Morgan Stanley’s clients cut their net leverage at a pace not seen since last October.

Stocks swung between gains and losses on Monday after the S&P 500 saw its worst weekly slide since the banking turmoil in March last week, falling almost almost 6% from its 2023 high in late July. The benchmark index is now hovering near a three-month low, according to a Bloomberg.