Investing.com — Goldman Sachs analysts say stocks around the world sold off for a ninth straight week from Sept. 6-12.
In a note to clients on Friday, the investment bank said gross trade flows also posted their biggest enhance in five months, “driven by short selling outpacing long purchases.”
Goldman Sachs noted that financials, health care, industrials and communication services were the sectors with the most net buys. In particular, the financials sector recorded the largest net buys since June 2023, after being a net seller in seven of the last eight weeks.
The industries with the highest net sales were information technology, consumer staples and consumer discretionary.
Goldman Sachs reported that with the exception of real estate and utilities, gross turnover growth was recorded in all sectors.
In the previous trading week that ended Friday, all three major Wall Street averages rose and ended near two-week highs. Growing bets that the Fed could implement a 50 basis point cut, rather than a more modest 25 basis point cut, fueled stocks higher after its two-day meeting on Sept. 17-18.
Small companies were the main beneficiaries of the increased bets on a deeper cut, with the small-cap index rising 4.4% for the week. These companies rely heavily on variable-rate loans to fund their operations, leaving their stocks more exposed to changes in borrowing costs.
The odds that policymakers will deliver a 50-basis-point rate cut were 59% on Monday, according to CME Group’s (NASDAQ:) closely-monitored FedWatch tool. Over the weekend, bets on a quarter-point cut and a half-point cut were equal, the latest sign of a rapidly changing debate on cuts.
Just a week ago, investors, convinced by data showing slightly higher-than-expected growth in producer and consumer prices in August, were giving greater chances for a quarter-percentage-point cut.
However, recent media reports indicate that the case for a 50 percentage point cut remains valid, with former New York Federal Reserve President Bill Dudley saying the case for such a cut is powerful.
