BofA says clients bought equities last week as market entered correction territory

Investing.com -- Bank of America (BofA) clients continued to buy U.S. equities last week, marking a seventh consecutive week of inflows totaling $3.1 billion, as the market entered correction territory following recent declines.

Single stocks saw net buying, while exchange-traded funds (ETFs) were sold, although equity ETFs still attracted inflows as fixed-income ETFs saw larger outflows.

Private clients extended their buying streak to 14 weeks, the longest start-of-year trend in BofA’s data since 2008. However, in the past five weeks, they have shifted toward selling single stocks while continuing to buy ETFs.

Institutional clients turned net buyers for the first time in three weeks, while hedge fund clients sold equities for a fifth straight week.

Meanwhile, corporate buybacks picked up but remained below seasonal norms after elevated activity in January and February, BofA notes.

By sector, Energy and Technology stocks led inflows, with Energy seeing its largest since March 2023 and Tech recording its biggest since July 2023.

“Both Energy and Tech buying was led by institutional clients,” BofA strategists led by Jill Carey Hall said in a note.

Industrials also saw a third consecutive week of inflows, while Communication Services and Consumer Staples saw the largest outflows, with Communication Services experiencing its biggest since July 2023.

Consumer Discretionary stocks recorded their first inflow in three weeks, despite ongoing concerns over U.S. consumer strength.

“Bigger inflows into cyclical than defensive sectors in aggregate, suggesting that clients weren’t positioning for recession,” the report states.

Small-cap ETFs, however, faced their biggest outflows since mid-2022.

Overall, clients bought equity ETFs across styles and most size categories, but small-cap ETFs were heavily sold.

Sector ETF flows were positive in eight of 11 sectors, led by Financials and Consumer Discretionary, while Health Care and Communication Services ETFs saw the largest outflows.