Goldman Sachs: Expects $40 billion in stock sell-off next week.
Goldman Sachs said in a note to clients that the S&P 500 index fell below a closely watched level, giving the green light to trend-following hedge funds that may sell nearly $40 billion worth of stocks in the coming week. The S&P 500 index fell below 6725 points on Wednesday. In a note sent to clients later that day, Goldman Sachs said that trend-following hedge funds view this critical level as a signal to either sell positions or increase short bets that stocks will decline further. Goldman Sachs' calculations show that after the stock price fell below this number, nearly $39 billion worth of stocks could be sold globally in the following week. If prices continue to fall, the bank estimates that systematic trend-following hedge funds could sell up to about $65 billion worth of stocks. Trend-following hedge funds aim to capitalize on signals at the start of market trends—whether up or down. These signals can be based on trading volume, price, or the speed of asset price changes during the trading day. Goldman Sachs' report said that before the stock sell-off began, these hedge funds were long about $150 billion worth of global stocks. Goldman Sachs stated that the last time stock prices fell below these closely watched levels was in October, and before that on April 2, when U.S. President Trump announced a series of tariff proposals.
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