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Wall Street Unwinds Defensive Bets as Risk Appetite Returns

Major financial institutions are scaling back protective positions as market sentiment shifts toward higher-risk assets. The strategy reversal reflects growing confidence among traders, with previously shorted equities surging roughly 30 percent in recent weeks. The dollar's strength this month, driven by expectations of elevated U.S. interest rates, has prompted strategists to reassess their cautious outlook. Market participants increasingly believe the economic backdrop supports a more aggressive stance. This has prompted liquidation of hedges that proved costly during the recent period of uncertainty. The shift signals renewed appetite for cyclical trades and positions sensitive to economic growth. However, some analysts caution that rapid unwinding of defensive strategies could create volatility if sentiment reverses unexpectedly.