Trading flows were driven by long buys and short covering in a combination of index and exchange-traded fund products, the Goldman traders said in a client note. Short positions in US-listed ETFs dropped for a second week as they declined 0.6%.

Sustained investor enthusiasm around artificial intelligence infrastructure spending and a stronger-than-expected earnings season have powered a relentless rally in US stocks. The S&P 500 has posted nine weeks of consecutive gains, the longest such streak since 2023. The tech-dominated Nasdaq 100 Index, meanwhile, is up more than 20% this year.

The latest hedge fund positioning data marks a notable shift from the more defensive posture that the Goldman desk noted two-thirds of the way through May. The traders reported then that the funds had taken profit on chip stocks and added macro shorts amid rising bond yields and above-consensus inflation prints.

Financial stocks were the clearest beneficiary of last week’s rotation, attracting the largest net buying in almost six months, the Goldman traders said. Long purchases outpaced short sales by roughly 6.5 to one, led by payment stocks and, to a lesser extent, banks. This was partially offset by selling in consumer finance and capital markets.

Even with the latest inflows to financials, allocations to the sector remain deeply depressed, the Goldman team noted. “Gross and net allocations in financials as a percentage of total US Prime book are still essentially at their respective 5-year lows in the 1st percentiles,” the desk wrote.

The push into financials contrasted sharply with continued pressure on industrials, which were net sold for seven of the last eight weeks. Short exposure in the sector has reached the 90th percentile on a one-year basis, with most of the selling since February driven by short sales rather than long liquidation, the Goldman desk noted.

The traders said there was little clear net directional activity in single stocks last week, with long sales roughly offset by short covers.