Bank of America client flows show significant equity inflows – the largest since October 2022. Clients demonstrated robust interest in US equities with net purchases amounting to $6.4 billion, spanning both single stocks and ETFs.
Notably, institutional clients favored single stocks, while hedge funds and private clients leaned towards selling, marking five consecutive weeks of net selling for hedge fund clients.
A noteworthy development is the acceleration of corporate buybacks, reaching the highest levels since 2009. This trend has persisted for six weeks, with buybacks exceeding seasonal norms.
Year-to-date, corporate buybacks as a percentage of S&P 500 market capitalization have surpassed the levels observed in 2022, reflecting a bullish sentiment among corporate clients.
Sector-wise, technology and communication services led the inflows, experiencing a positive streak since October. Conversely, industrials saw substantial outflows, marking the largest weekly outflow since July.
“We are underweight Health Care Health Care in our year ahead outlook. Industrials saw the largest weekly outflow since July,” analysts at Bank of America said in a note.
The strategists also underscored the preference for cyclical sectors over defensives, aligning with Bank of America's sector views with a cyclical tilt.