Hedge funds sharply reduced exposure to technology stocks last week, marking the sector’s largest weekly sell-off in a year, according to a report by Reuters citing a note from Goldman Sachs The rotation comes even as the S&P 500 hit all-time highs, driven by tech-heavy gains.
Rather than shorting, hedge funds exited long positions across the board, from semiconductor firms to software and IT services companies, focusing their selling activity in North America and Europe. According to Goldman, this was the biggest tech stock outflow since July 2024.
At the same time, hedge funds increased allocations to consumer staples stocks – companies that provide essentials like food, beverages, and personal care products. These trades were predominantly long-only, suggesting a defensive positioning strategy amid concerns over valuations and interest rates.
Goldman’s data aligns with broader market signals. The S&P 500 forward P/E ratio hit 23.11, near five-month highs, while valuations are now around 30% above their 10-year average, according to LSEG data. Meanwhile, persistent volatility in 10-year yields has added to investor caution.
