July Ends with Mixed Results for Stocks Amid Momentum Sell-Off
Stocks ended July on a cautiously optimistic note as momentum stocks staged their largest two-day rally since June, following reports that an AI-focused hedge fund had sold its equity portfolio. Despite this rebound, chip and other high-beta momentum names still closed the month sharply lower, with the Nasdaq Composite falling about 3% — marking its worst monthly performance in over a year. The Goldman Sachs High Beta Momentum Basket saw its worst July since November 2000, as long positions struggled while short holdings rallied. Analysts remain uncertain whether this recent rebound signals the bottom of the momentum rotation or just another temporary reprieve amid ongoing pressure from forced selling and shifting investor sentiment toward software and financial sectors. Fundamental factors have taken a back seat to technical indicators in recent weeks, with investors rotating away from AI-driven chip stocks into other areas like energy and real estate. While oil prices rebounded and Apple saw mixed performance, the broader market showed signs of stabilization as volatility eased.
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Topics: hedge funds momentum trading semiconductors stock markets