Short sellers increased their bets against many of the S&P 500's largest stocks as the index hit a fresh all-time high in July and before it declined in a broad market sell-off in early August.

Eleven of the S&P 500's biggest stocks by market capitalization had higher levels of short interest at the end of July than they did a year earlier, as short sellers correctly anticipated that a decline was nearing, according to the latest S&P Global Market Intelligence data.

The increase in short interest in these large-cap stocks was generally modest over the past year, and short interest in the largest stocks remains well below the average for the index. Apple Inc., the largest stock by market cap, saw its short interest rise to 0.9% at the end of July from 0.7% a year earlier, while Microsoft Corp., the second largest stock, saw its short interest increase to 0.8% from 0.5% over the same period.

S&P 500 trends

Overall, short interest in the 20 biggest stocks averaged 0.9% at the end of July 2023 and increased to 1% at the end of July 2024.

Average short interest for the entire S&P 500 index was 2.6% at the end of July, up from 2.2% a year earlier and matching a high for the year.

The S&P 500 hit a new all-time high July 16 before plunging about 8.5% through Aug. 5, as the unwinding of the yen carry trade and a weaker-than-expected jobs report triggered a global stock market sell-off. The S&P 500 has since recovered about 5%.

Healthcare in focus

Short interest in healthcare stocks jumped to 5.49% at the end of July from 5.26% at the end of June, making it the most shorted sector.

Short interest in consumer discretionary stocks, the most-shorted sector since early 2022, fell to 5.45% at the end of July from 5.56% at the end of June. Consumer discretionary was the second most shorted sector at the end of July.

The most shorted healthcare stocks were Windtree Therapeutics Inc. with 44.2% short interest, Cassava Sciences Inc. with 39.7% short interest and Tivic Health Systems Inc. with 38.8% short interest.