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Last week, when the S&P 500 rallied 1.9%, Bank of America’s (NYSE:BAC) clients were net buyers of U.S. equities (roughly $700 million) for the first time in four weeks.
The data shows that investors were selling ETFs but buying single stocks for the second straight week. Retail clients were the only sellers as both institutional traders and hedge funds were buying stocks.
“[This] trend we have also observed YTD (and so far, in no other year in our post-GFC data history). We continue to see this as a good backdrop for active>passive,” the BofA strategists wrote in a client note.
They also noted that corporate buybacks decelerated last week.
“Due to a strong start in Jan., corp. client buybacks YTD as a % of S&P 500 mkt. cap (0.047%) are tracking just below ’22 records at this time (0.049%). But buybacks have been below typical seasonal trends for the last five weeks and new buyback announcements have been sparse,” the strategists added.
BofA’s clients were mostly buying Tech and Financial stocks while Health Care & Industrials saw the biggest outflows, where Industrials has the longest recent selling streak (seven weeks).
“Longest recent buying streak: Materials (last six weeks). And while so far this week the sector has underperformed following China’s below-consensus GDP target, we see other reasons beyond China reopening to like the sector and believe inflows could continue (fund positioning still underweight).”
