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Hedge funds reverse bearish stance on consumer stocks

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Hedge funds turned bullish on consumer stocks during the week ending 3 May as the latest economic data, including a softening in the US labour market, and comments by Federal Reserve Chair Jerome Powell combined to revive bets on interest cuts, according to a report by Bloomberg.

The report cites data from Goldman Sachs’s prime brokerage unit in revealing that consumer discretionary stocks saw the most net buying during the week, driven by long buys as well as the largest short covering seen since December 2023, but remain the most net sold US sector on the bank’s prime book so far this year.

Broadline retail, autos, hotels, restaurants and leisure were the most net bought sub-sectors, according to Goldman.

Last week, Powell signalled he did not see additional interest rate hikes prompting swaps traders to revive wagers that the US central bank will begin lowering rates by the end of the year.

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