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S&P Global Market Intelligence has indicated a decline in short selling in US consumer discretionary stocks amid signs that inflation may have peaked.
Short interest — which measures the percentage of outstanding shares held by short sellers — in US consumer discretionary stocks stood at 5.13 per cent at the end of October 2022, according to the firm’s latest data.
Despite an increase in short interest in US consumer discretionary stocks during August and September, S&P Global data shows a decline from earlier in October and nearly 50 basis points below a peak in June of 5.62 per cent.
According to S&P Global Market Intelligence, the decline in short interest has coincided with slowing inflation. The consumer price index (CPI) indicates that the pace of consumer price increases may have peaked in June at 9.1 per cent year-over-year.
The latest CPI reading shows consumer prices were up 7.7 per cent YoY in October 2022.
Short interest in the consumer discretionary space remains well above other sectors. Eight of the 20 most-shorted US stocks at the end of October were consumer discretionary stocks, including Carvana Co., Bed Bath & Beyond Inc., EVgo Inc. and Mullen Automotive Inc.
Average short interest in the S&P 500 remains relatively steady and was recorded at 2.33 per cent at the end of October, a decline from 2.54 per cent in October 2021.
