Hedge funds snap up US tech stocks amid falling rates, says Goldman Sachs
Hedge funds bought U.S. tech and media stocks at the fastest pace in four months last week, said a Goldman Sachs prime brokerage note to clients seen by Reuters on Monday, spurred by the Federal Reserve's anticipated 50-basis point rate cut.
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.
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