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Hedge Funds Slash Exposure from US Stocks After Huge Swings Hurt Returns

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Hedge funds have unexpectedly scaled back their coverage in the US stock market as sharp fluctuations have struck big money managers, according to a report by FT on Wednesday.

Funds that trade with some of the largest banks on Wall Street, including Goldman Sachs and JPMorgan Chase, have rapidly downgraded their long and short stock positions or bets on prices rising or falling.

The move follows the worst sell-off in the $46 trillion US stock market since it was hampered by the Covid-19 pandemic two years ago. The benchmark S&P 500 Index has plunged 11% this year as investors respond to surging inflation.

The Fed’s tighter monetary policy and Russia’s invasion of Ukraine have pushed commodity prices up and caused uncertainties in the global growth outlook.

Last week, Morgan Stanley informed clients that they had seen one of the largest five-day of selling in North American stocks by hedge funds on record. S&P 500 Index up +1.63%

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