Falling rates are expected to rejuvenate industrial spending, making it easier for companies to borrow money at lower costs and for consumers to buy tech products, all of which might benefit the stock prices of these companies.
The Fed’s first rate cut in four years lifted U.S. stocks last week, with the S&P 500 index closing Friday 1.15% higher, as recession fears ebbed and investors digested the implications of easing monetary policy.
Hedge funds placed almost three times as many long positions on the bet that information technology stocks would rise, compared to those with bets against them, said the prime brokerage note.
Buying in semi-conductor and related equipment companies outweighed selling in tech hardware, like computer, monitor and hard drive manufacturers, the Goldman Sachs note said.
Hedge funds also ditched their short position and added long bets on interactive media and entertainment companies, the note said.
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A short position expects an asset value to fall. The broader technology and media sector now makes up almost a third of overall U.S. net portfolio exposure, it said.
By contrast, consumer products were the most sold on Goldman Sachs’ prime brokerage book, the note said.
Selling outweighed buying in U.S. consumer discretionary stocks like hotels and restaurants for the first time in four weeks and the sector suffered the largest net selling in a year, according to the note.
Gross leverage, or total hedge fund borrowing and investments, reached roughly 278%, among the highest levels seen this year, it said.
