Investors are taking precautions. Hedge funds boosted bets against equities, data compiled by Morgan Stanley’s prime brokerage unit showed last week. At Goldman Sachs, fund clients increased shorts through ETFs while snapping up single equities. A record 34% of investors surveyed by Bank of America Corp. said they’ve purchased protection against a sharp drop in stocks over next three months.
Still, an outright trade war isn’t what Wall Street is bracing for. Strategists from JPMorgan to Goldman Sachs stood by year-end forecasts, saying it’s hard to change their calls solely on the basis of trade headlines.
Investors pulled $8.1 billion from U.S. stocks and ETFs in the five days through Wednesday, it fell short of the $13 billion outflow a week before, data compiled by EPFR show.
“There is no doubt, there is this fear that things will get worse and stocks will tumble, but then there’s a lot of greed, what if we keep on going up?” said Donald Selkin, chief market strategist at Newbridge Securities Corp. “We need to assess what kind of effect the tariffs have on companies, but it’s a little early. It will be hard to get back to previous highs, but a lot of people think we’re not going to turn south.”
This article was provided by Bloomberg News.