Short sellers cut their bets against all U.S. stock sectors over the past four months as equity prices rose.

Average short interest in the S&P 500 was 2.25% in mid-February, down 11 basis points from mid-October 2022 when the S&P 500 hit a recent low, according to the latest S&P Global Market Intelligence data.

Short interest, which measures the percentage of outstanding shares held by short sellers, fell across all sectors from mid-October 2022 to mid-February, as the S&P 500 rallied about 16% over the same stretch.

Short interest in consumer staples registered the sharpest fall among sectors, with a 3.36% level as of mid-February, down 254 basis points from mid-October.

Sellers continued to target the consumer discretionary sector, still betting that persistently high inflation will continue to dig into consumer demand. Short interest in consumer discretionary stocks was at 5.61% in mid-February, well above the next most-shorted sector, healthcare, which had short interest of 3.99%.

Most-shorted companies

Silvergate Capital Corp. remained the most-shorted U.S. stock as of mid-February, with short interest of nearly 62%. Bed Bath & Beyond Inc. was the second most-shorted stock, at more than 55% short interest.

Energy in focus

Short sellers mostly continued to target the energy sector amid falling commodity prices. Short interest in the energy sector was at 3.57% in mid-February, down from 4% in mid-October 2022.

Sellers have largely bet against integrated oil and gas stocks, a subsector that had 7.03% short interest as of mid-February.

Within the energy sector, Vertex Energy Inc. was the most-shorted stock with 31.7% short interest. Aemetis Inc. was next with 19% short interest.