Professional Speculators Offload US Equities Amid Trump's Tariff Threats
In response to President Trump's escalating tariff rhetoric, hedge funds have shed US stocks for a fifth consecutive week. Data from Goldman Sachs' prime brokerage reveals a surge in short sales of individual stocks and long sales of macro products.
The move by institutional investors aligns with expectations of a market downturn triggered by Trump's intention to impose 25% tariffs on Canadian and Mexican goods. S&P 500 futures plummeted 1.7% as of 8 a.m. ET in New York, extending last week's 1% decline. Goldman's chief equity strategist, David Kostin, estimates a potential 5% drop in US stock values if the tariffs persist.
Despite Trump's previous indecisiveness on tariffs, their imminent implementation has prompted speculators to anticipate market volatility. Retail investors, however, have taken a different stance, with $2.1 billion invested in US stocks on Friday alone. This influx marks only the tenth occurrence in the past three years, five of which have transpired in 2025.
Goldman's analysis reveals that hedge funds have sold nine of the 11 sectors within the S&P 500, with consumer discretionary, industrials, financials, energy, communication services, and information technology experiencing the highest net outflows.