The Ultimate Market Analysis: BofA Securities Clients Sell $8.0 Billion in U.S. Equities - Largest Exodus Since 2020
In a shocking turn of events, BofA Securities clients were net sellers of U.S. equities in the final week of August, with a whopping $8.0 billion in outflows. This marks the largest weekly exodus since late 2020, all amidst economic uncertainty.
This trend of net selling continued for the second consecutive week, with clients offloading both single stocks and exchange-traded funds (ETFs). Large, mid, and small-cap stocks all felt the impact of these outflows, according to BofA's Wednesday note.
Interestingly, all major client groups (excluding corporates) were net sellers for the second week in a row. Institutional and hedge fund clients led the selling charge, while private clients have been on a selling streak for four weeks now.
The tech sector experienced the largest outflows since May, following the post-Nvidia earnings sell-off, while healthcare also saw its biggest outflow since early July. On the flip side, communication services was the only sector to see inflows, maintaining a 22-week buying streak.
Energy and industrials continued to see outflows, with energy facing a six-week selling streak and industrials experiencing outflows in seven of the last eight weeks. Corporate client buybacks slowed for the second consecutive week, falling below seasonal levels, although buybacks year-to-date remain on track for a record year based on BofA's data.
In a surprising twist, ETFs saw the first outflows since June, with seven out of 11 sectors recording outflows. Materials ETFs saw the largest outflows, while Consumer Discretionary ETFs attracted the highest inflows. Clients sold Blend ETFs, but continued to buy Growth and Value ETFs for the fourth and 24th consecutive weeks, respectively. Broad Market and Large/Mid Cap ETFs saw outflows, but Small Cap ETFs were bought for the third consecutive week.
In conclusion, this data highlights a significant shift in market sentiment, with clients opting to sell off their U.S. equities amidst economic uncertainty. The tech sector, in particular, is feeling the heat, while communication services remains a safe haven for investors. It's crucial for investors to stay informed and adapt their investment strategies accordingly to navigate these turbulent times.