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Wall Street’s bond-market forecasters have had to revise their forecasts repeatedly – barely halfway through the year.Mark Lennihan/The Associated Press

A year that's brought little but pain for bearish traders is getting worse.

Not only is the rising market punishing shorts, it's lifting their favourite targets at a rate that is by some measures three times as great as everything else. As a result, the 50 most-shorted stocks - that is, the ones bears had bet would fall - have instead rallied 16 per cent since the end of June, the biggest gain in more than five years, data compiled by Bloomberg and Goldman Sachs Group Inc. show.

Unlucky stock selection is making a tough year worse for the group, who've watched the value of U.S. stocks swell by more than $2-trillion as the S&P 500 Index almost doubled its gain this year to 7 per cent. The measure slipped 0.2 per cent Wednesday to 2,177.106 at 12:21 p.m. in New York, five points below an all-time high.

From concerns Brexit would derail the global economy to fifth straight quarter of earnings contraction and stretched equity valuations, investors had more than enough reasons to bet against U.S. stocks this summer. Those wagers have gone south as traders snapped up companies whose prospects are tied to an expanding economy, signalling expectations for continued central-bank support amid steady growth.

"This environment of low interest rates and excess capital availability provides significant danger to shorts in this market," said Walter Todd, who oversees about $1.1-billion as chief investment officer for Greenwood Capital Associates LLC in South Carolina. "This particular market has continued to grind higher, and it's never a good idea to short when things are relatively dull."

Investors have already started scaling back short positions as their effectiveness comes into question amid a market that's notched eight closing highs in the past month. Short interest on the SPDR S&P 500 ETF, which tracks the benchmark index, fell to an almost 20-month low last week. The measure now sits at 3.8 per cent of shares outstanding, more than two percentage points below its two-year average.

Bears have pointed to equity valuations that sit at the highest in more than a decade on an estimated earnings basis, yet the S&P 500 Index has pushed its advance since the post-Brexit selloff toward 9 per cent. The index has recently received a boost from signs of economic expansion, highlighted by July payrolls data that beat estimates on Friday, bolstering confidence in the U.S. economy.

The rally has lacked conviction, based on trading volume, with the number of shares changing hands on days the S&P 500 closed at record 15 per cent lower than the average up day. The index has been stuck in a range of about 40 points since July 8, going 23 days without a move of more than 1 per cent in either direction, the longest such streak since 2014.

"There's a little bit too much complacency at this time," Dubravko Lakos-Bujas, head of equity strategy and global quant research at JPMorgan Chase & Co., said in an interview on Bloomberg Television. "There's a lot of expectation that's already priced into the market."

Among shares moving on Wednesday, Transocean Ltd. and Exxon Mobil Corp. fell at least 1 per cent to lead energy companies lower after crude tumbled on data showing an increase in crude inventories amid weakening refinery demand. Banks retreated as yields on the 10-year Treasury note slid on speculation the Federal Reserve won't rush to raise interest rates. Perrigo plunged 10 per cent, the most in the S&P 500, after cutting its annual earnings forecast.

More than 90 per cent of S&P 500 members have posted quarterly results this season, of which 78 per cent beat profit predictions and 56 per cent topped sales projections. Michael Kors Holdings Ltd., among four companies on the index reporting today, fell 1.5 per cent after its quarterly comparable sales fell more than expected.

Analysts have tempered their estimates for a decline in second-quarter net income to 2.7 per cent, from a 5.8-per-cent drop less than a month ago. Forecasts for the current quarter ending in September have turned negative, indicating a sixth consecutive period of falling profits, the longest since the financial crisis.