- Hopes for Fed policy pivot are fading after Jackson Hole
- ETF investors are flocking toward bearish funds, value stocks
A $3.2 billion exchange-traded fund betting against the S&P 500 pulled in the most cash in over two years as investors recalibrate their expectations for stocks in the face of a more hawkishFederal Reserve.
Traders added a net $154.4 million to the ProShares Short S&P 500 ETF(ticker SH) in the latest session, the largest one-day increase since April 2020, according to data compiled by Bloomberg.
The fund seeks daily results that correspond to the inverse of the performance of the US equity benchmark. It has gained about 15% in 2022 as the gauge has tumbled.
Bearish bets against the US equity market have piled up in recent days as the summer stock rally fades, Treasury yields rise and investors dial back hopes for a policy pivot from the Fed after Chair Jerome Powell delivered a hawkish tone in Jackson Hole.
The policy-sensitive two-year US yield is hovering near its highest level since 2007, while the S&P 500 swings between gains and losses.
Two ETFs from ProShares that place bearish bets on technology stocks pulled in net positive inflows in the previous two sessions with data available.
A Nuveen fund tracking value shares saw its largest inflow in four months on Monday, in a sign equity investors who are still looking to go long are placing their bets on stocks that tend to fare better when rates are headed higher.
According to Bloomberg BQuant, the Nuveen flow was one of the largest inflows as a percentage of market capitalization for all US exchange-traded products above $500 million in assets.
“We do not believe the bottom is in for stocks, especially as the bond market, with inverted yield curves on the 2-10s and 2-30s, is reflecting tough economic times ahead,” said Michael Landsberg, chief investment officer of Landsberg Bennett Private Wealth Management, in emailed comments. “While many investors are focused on a retest of the mid-June lows, we believe the market has the potential to fall below that threshold.”
