Hedge funds are making a notable pivot, selling off industrial stocks at the fastest rate since December while continuing to buy energy stocks for the fourth consecutive week, according to a report by Reuters.

The reports cites a Goldman Sachs note as highlighting that last week, hedge funds offloaded industrial stocks at some of the highest levels seen in five years, with the sell-off primarily targeting companies involved in professional services, ground transportation, machinery and passenger airlines. Purchases of air freight and defence stocks, however, saw a slight uptick.

The switch from industrials to energy stocks suggests that hedge funds are making early bets on sectors that might thrive under an anticipated US interest rate cut, ahead of Federal Reserve Chair Jerome Powell's upcoming speech at the Jackson Hole symposium on Friday.

According to Goldman Sachs' US prime brokerage data, energy stocks were the most bought sector by hedge funds. The report noted that hedge funds purchased shares in oil, gas, consumable fuels, and energy equipment and supplies companies for the fourth week running.