Goldman Sachs reported an unprecedented surge in short-selling activity among hedge funds as market volatility intensified following President Donald Trump’s announcement of steep tariffs. The financial behemoth found that high-turnover traders recorded the biggest net one-day sales of worldwide stocks on record last week. This move was born out of the wild stock market swings due to erratic trade policy.
Goldman has been tracking order flow since 2010, and the recent trading revolution represents a major tipping point in trading pattern behavior. Tony Pasquariello runs hedge fund client coverage at Goldman. He noted that the day after Trump first announced his crazy blanket tariffs, professional commodity traders reacted by making record net sales. The impact was immediate—the announcement precipitated massive fluctuations on Wall Street. In less than a week, the S&P 500 had dropped 34%.
Market response was swift and severe. As we reported last Thursday and Friday, the Dow Jones Industrial Average experienced two consecutive days of 1,500-point losses. This was an entirely unprecedented occurrence in the index’s 129-year history. These declines fueled a concerted and aggressive selloff across every sector of our economy. Goldman today reported that the pace of selling in the financial sector reached its fastest rate since January 2021, becoming the second fastest on record https://t.co/aPyMJDrKl5.
We expect lower stock prices to take the other side of heavy selling across many parts of Goldman’s franchise to hurt. Pasquariello noted that a lot of investors are leaning towards a self-defense strategy with the increasing level of uncertainty. Selling sprees Last week’s turmoil led to heavy net selling in nine of the eleven investment sectors within the S&P 500. Financials, technology, and consumer discretionary stocks took the hardest hits.
Trump’s tariff policy has far-reaching implications. It would increase U.S. uniform tariff rates from 2.5% to more than 20%, levels we haven’t seen since before World War I. The Smoot-Hawley tariffs of 1930 were some of the highest ever. Yet, even so, they’re nowhere near the levels that the current administration is calling for. The critics of these tariff measures have argued that their use will lead to economic instability. The chair and CEO of Omega Family Office expressed that these tariffs could be a grave mistake, warning they might drive the U.S. economy into recession.
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