Last week saw a remarkable surge in hedge fund activity in U.S. equities—not seen in nearly two months. Driven by growing confidence that the Fed is preparing to cut interest rates come September, these investors moved back into stocks with gusto.
Rather than sheltering in defensives, they leaned into growth-linked sectors. Index funds and financials attracted most of the inflows, while sectors traditionally viewed as safe havens—healthcare, consumer staples, and utilities—were the most abandoned, enduring their steepest sell-offs in four months. Despite this shift, financials stood out for their activity volume, posting some of the strongest trading levels since late last year.
What’s notable is this wasn’t just a U.S.-centric bet. Hedge funds from across the world—not just domestically—piled into American equities, signaling a renewed conviction in U.S. economic strength and the Fed’s potential pivot toward easing. All roads led to Jackson Hole, where Powell’s remarks are being viewed as a likely turning point for policy and investor positioning alike.
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