Wall Street's recent risk aversion to stocks may have created conditions for a strong rebound in the market. If Anthropic's IPOs reignite investors' enthusiasm for artificial intelligence, tech stocks in particular are likely to rebound. According to Deutsche Bank data, investors have reduced their exposure to stocks to a level that is generally in line with the historical norm. Active investors' exposure to US stocks has fallen to its lowest level in more than a month, and funds using computer-driven trading strategies have also reduced their holdings. Once market confidence picks up, there is still room for a new round of buying. Hedge funds are more aggressive and are increasingly betting on falling stock prices. Goldman Sachs Group said that for every $1 of stock bought by its hedge fund clients this month, they are shorting about $5 of stock. The company's records show that hedge funds borrow money to bet on the scale of stock price declines, which is currently close to the highest level in five years. If the stock market then strengthens, these short bets may instead become an upward booster, forcing investors who are betting on falling to buy stocks to close their positions.

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