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U.S. stock investors sit on gains as downside risk rises

With few short positions left, markets could react more sharply to weaker economic news, since many gains are still unrealized.

Reported · Written up by our desk · Equities

MarketWatch reports that U.S. investors have been buying stocks throughout the month and are now sitting on unrealized profits.

The outlet says the combination of large unrealized gains and a relatively low level of short positioning leaves equity markets more vulnerable to a downturn if economic data or other news flow deteriorates.

According to MarketWatch, that setup means the market response to negative surprises could be more pronounced than it would be in a more hedged or balanced positioning environment.

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