Bank of America clients buy the dip in stocks, inflows total $5.8 billion
Bank of America's clients are taking advantage of the recent dip in stocks, with inflows totaling $5.8 billion last week. This marks the tenth biggest inflow since 2008, according to BofA strategists. Clients turned net buyers of single stocks and equity exchange-traded funds (ETFs), with larger inflows directed towards individual stocks across all market cap sizes.
Institutional clients were net buyers for the first time in five weeks, while hedge funds and private clients were net sellers. Buybacks among corporate clients remained robust, tracking above typical seasonal levels for the last 22 weeks.
Looking ahead, BofA strategists caution that client flows tend to weaken during the fall months, and they expect continued equity volatility heading into the US election. Technology and Communication Services stocks led sector inflows last week, with Communication Services enjoying a 19-week buying streak. Technology saw inflows for the first time in four weeks.
Overall, seven out of the 11 sectors experienced inflows, with Financials witnessing its largest buying activity since April. Energy, Staples, Real Estate, and Utilities stocks were sold off by clients, with Energy stocks facing three consecutive weeks of selling.
In the ETF market, tech funds attracted the largest inflows, while healthcare ETFs saw the most significant selling.
Analysis:
Bank of America clients are showing confidence in the market by buying the recent dip in stocks, with significant inflows totaling $5.8 billion. This reflects a positive sentiment among investors, particularly towards individual stocks and large cap companies. However, caution is advised as client flows may weaken during the fall months and volatility is expected leading up to the US election. Investors should pay attention to sector trends, with Technology and Communication Services leading the way in inflows. It is essential to diversify investments and stay informed about market developments to make informed decisions about their finances.