Hedge funds are becoming increasingly bearish on U.S. stocks, with a significant rise in short positions, according to Goldman Sachs.
Since early 2024, these funds have sharply increased their short bets, and by March 2025, the net trading flow had dropped below -25%. This indicates a strong push towards betting that stock prices will fall. In January 2025, Goldman Sachs reported that short positions were ten times greater than long positions, driven by concerns over a potential U.S. market crash.
The growing anxiety among traders is linked to fears of a downturn, partly due to a tech stock sell-off and rising competition from Chinese companies in the AI sector. This shift is a sharp contrast to November 2024, when hedge funds were more optimistic, focusing on long positions as they anticipated market growth. The increased short positions now reflect the heightened uncertainty in the market.
JPMorgan Turns Bearish: Warns of Slowing US Growth and Lower Earnings Forecasts
JPMorgan’s trading desk is turning short-term bearish due to ongoing tariff escalations. They see no clear end to the situation, which could significantly hurt US economic growth. As a result, they expect GDP forecasts to drop and corporate earnings estimates to be revised lower. This may force analysts and investors to reconsider their year-end market predictions.
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