According to a recent note from Goldman Sachs, U.S. equities saw marginal net buying last week after eight consecutive weeks of selling.
The investment bank explained that this shift occurred during a week marked by significant volatility across global risk assets, despite the S&P 500 (SPX) ending the week relatively flat.
Goldman Sachs noted that while macro products were net sold for the third straight week, primarily driven by short sales, single stocks experienced the largest net buying in six months, with hedge funds buying across nine of the eleven sectors.
The note highlighted, “Early in the week, price action was indicative of asset manager and quant rotations out of equities,” particularly in cyclicals and semiconductors, while there was a noticeable rotation into defensive sectors like Health Care and Tech.
As market conditions began to stabilize later in the week, investors are said to have started to take a more offensive stance, focusing on earnings reports and quality stocks.
According to Goldman, hedge funds ended the week with a $1.5 billion net buying position, while long-only funds remained roughly flat.
In the derivatives market, the report emphasized that Monday’s volatility was historically significant, with the VIX index moving more than 40 points in a single day. Goldman Sachs predicts that market conditions will remain choppy until the VIX options expiry on August 21st, after which they expect improved liquidity.
Overall, while the week was turbulent, the bank says slight net buying in U.S. equities suggests that some investors are beginning to see value in reentering the market amid the volatility.