Since August, the market has experienced some interesting phenomena during the 'Black Monday'. The U.S. stock index has shown different trends, with the Dow Jones Industrial Average and the S&P 500 Index both gaining nearly 2% in August, and both reaching new highs. In contrast, the Nasdaq has gained less than 1%, representing a cumulative decline of 0.69% for the magnificent 7, which are represented by the seven giants in the AI sector. At the same time, the attention of Wall Street's trillion-dollar fund, the U.S. mutual fund, has also shifted from the magnificent 7. Investor's Business Daily has compiled a list of stocks bought by mutual funds this month, and the data shows that after the quiet rotation of the market in August, these large institutions did not choose to increase their positions in the magnificent 7 or the AI sector, but turned to other industries and bet on potential stocks. $Invesco Exchange Traded Fd Tr S&P 500 Equal Weight Etf (RSP.US)$ Did Netflix rise to the top, betting on a price increase at the end of the year? $Roundhill Magnificent Seven ETF (MAGS.US)$ As one of the former 'FAANG' members, due to

the rotation in the market in August, these large institutions did not choose to increase their positions in the magnificent 7 or the AI sector, but turned to other industries and bet on potential stocks.

Did Netflix rise to the top, betting on a price increase at the end of the year?

As one of the former 'FAANG' members, $Netflix (NFLX.US)$ The stock price has been somewhat bleak since 2022, not joining the ranks of the magnificent 7 that attract capital. However, a turning point began to emerge at the end of 2022 and the beginning of 2023 - the launch of advertising membership packages, and an increase in crackdown on account sharing, which has brought extremely intuitive growth to Netflix's performance.

So far this year, Netflix's stock price has also maintained a rebound trend, with a nearly 40% increase year-to-date, surpassing the average performance of the magnificent 7 during the same period. Not only that, during the turbulence in the US stock market in August, Netflix also hit a new high against the market, with the share price reaching a historical high of $711.3 at one point.

And why is it only Netflix that is attracting attention from investors at this time? In fact, Netflix has recently received a series of positive news driving up the stock price. Last week, the company once again claimed to be entering the advertising market and revealed in a blog post that it had received "more than 150% increase in prepaid advertising sales commitments for 2023".

In addition, analysts say they are expected to raise package prices by the end of the year, especially considering the company's foray into sports - which will further "enhance its pricing power". Jefferies analyst stated, "We believe that entering NFL events (which only account for 2% of annual content spending) is a key driver of fourth-quarter subscriber growth, which will further boost Netflix's password sharing plan and support price increases."

Tech stocks are cooling off, are "smart money" turning to industries benefiting from rate cuts?

From other favored targets of mutual funds, a clear trend can also be seen - the increase in rate-cut bets. This trend is also in line with the overall market trend, as the Federal Reserve's rate-cut button is about to be pressed, and the recent chase for rate-cut beneficiaries has surpassed the previously hot AI technology stocks.

For example, Eli Lilly and UnitedHealth, which were the second and fifth largest inflows of funds this month, belong to the "old school blue-chip" healthcare sector, and these two stocks are also the top two holdings. $The Health Care Select Sector SPDR® Fund (XLV.US)$ HAS.US is a daily consumer stock, as the low interest rate environment is conducive to stimulating consumption and increasing consumers' disposable income. Waste management companies in the utilities sector $Costco (COST.US)$Please use your Futubull account to access the feature.$Hasbro (HAS.US)$ belong to the utilities sector. $Republic Services (RSG.US)$ Also received strong capital inflows.

In fact, in the historical context of each interest rate cut, defensive industries such as utilities, everyday consumer goods, and healthcare can benefit more than technology stocks, with the sector's average increase ranking in the top three among all S&P industries.

ETFs linked to these three major industry sectors also outperformed the S&P 500 index in August.$Consumer Staples Select Sector SPDR Fund (XLP.US)$ The highest increase, close to 6%.$Utilities Select Sector SPDR Fund (XLU.US)$N/A.$The Health Care Select Sector SPDR® Fund (XLV.US)$ Monthly average increase of about 5%.

Goldman Sachs' previously tracked data also reflects this trend. Even the "smart money" on Wall Street seeks safe haven amidst the volatile expectations of interest rate cuts and turbulence in the US stock market. Hedge funds and mutual funds continue to maintain long positions in US stocks, with the cash balance of mutual funds reaching a new low of 1.4% of assets, and hedge funds' net leverage ratio at 72%, the highest level in the past five years.

In addition, by the beginning of the third quarter, both hedge funds and mutual funds reduced their exposure to tech giants. Since 2022, it is the first time that hedge funds have reduced their holdings of the "magnificent 7" in their long portfolios. At the same time, both have increased their investments in the medical care industry, providing defensive and growth opportunities outside of the AI sector.

In addition to the individual stocks mentioned above, insurance stocks $WR Berkley (WRB.US)$ and Buffett's new favorite stock $Heico (HEI.US)$ Both stocks are among the mutual funds that have increased their holdings. These two stocks have reached new highs during the volatility in August and have become preferred choices in the market's defensive sectors.

Is the US expected to cut interest rates? Interest rate-sensitive long bonds, small-value stocks, biotech stocks and other assets have benefited from the rebound, and savvy investors who have deployed early have already gained profits! If you are still unsure about which assets to allocate during an interest rate cut cycle? How to allocate?Take a look at the "Interest Rate Investment Lazy Pack" course, which comes with the most comprehensive guide >>.

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