Consumer flows have shifted more negative last week, Bank of America strategists said in a Tuesday note.
Specifically, the rolling 4-week average flows turned negative in Consumer Staples for the first time since February, while in Consumer Discretionary, the flows are now the most negative they have been since early 2022, BofA noted.
“Flows have been much more negative in Discretionary than Staples the last few months, but we think Discretionary is better-positioned than Staples if further cracks emerge in the low income consumer,” strategists said.
During the week, while the S&P 500 rose by 1.9%, BofA’s clients were net sellers of U.S. equities, with a $4.0 billion outflow, continuing a trend from the previous week.
The outflows were primarily driven by institutional clients, who have been net sellers in seven of the last eight weeks. In contrast, hedge funds and private clients were buyers after being sellers the week before.
Meanwhile, institutional clients focused their selling on single stocks while buying exchange-traded funds (ETFs).
“Clients sold mid caps for a third consecutive week but bought large and small caps (fifth straight week of small cap inflows),” BofA highlighted.
Corporate client buybacks, although slightly decelerated from the previous week, continued to track above typical seasonal levels for the ninth consecutive week. Year-to-date, corporate buybacks as a percentage of the S&P 500's market cap are at 0.40%, exceeding the 2023 peak of 0.33%.
In terms of sector performance, BofA clients sold stocks in seven of the eleven GICS sectors, with the largest outflows in Consumer Discretionary, Industrials, and Consumer Staples.
Conversely, there were notable inflows into Materials, which saw the sixth-largest inflows in BofA's data history since 2008.