Investing.com — Investors sharply reduced their bullish positions on U.S. stock indexes, particularly the and , over the past week as sentiment soured on persistent inflation and signs of rising geopolitical tensions, according to Citi analysts. List said in the notes.
Citi said its bullish position against the S&P has decreased by $12.3 billion, and its overall net position is now only marginally positive relative to the index. This is due in part to a surge in new short positions over the past week.
The change in sentiment comes after Wall Street indexes posted sharp declines for the second consecutive week, as concerns about rising long-term interest rates and rising geopolitical tensions in the Middle East soured sentiment. .
Investors cashed in on Wall Street's big gains throughout the first quarter as tech stocks rose, in part due to weak risk appetite. But this sector is currently being hit hardest by profit-taking.
“S&P positioning currently remains marginally bullish, while the Nasdaq has turned neutral, primarily driven by new shorts and continued long de-risking flows,” Citi analysts said in a note.
It also said current positioning levels could “amplify further declines.”
The S&P 500 is down nearly 4% in the last month, and the Nasdaq 100 is down more than 5%. Although it was still trading positively year-to-date, it has wiped out most of its gains.
Chipmakers such as index heavyweight Nvidia Corporation (NASDAQ:) have seen recent declines following disappointing results and prospects for ASML Holding NV (AS:) and TSMC (NYSE:), which are seen as bellwethers. It was hit hardest by the decline. For semiconductor industry.
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Still, Wall Street found some stability on Monday, recovering from a steep sell-off as low valuations in the technology sector attracted buy-in.
There are a number of important earnings announcements from the tech industry this week, with four of the Magnificent Seven companies set to report their first quarter results in the coming days.
Earnings are largely expected to drive Wall Street's next moves, as investors wait to see whether major companies can justify the large valuation gains through the first quarter.
