Overview of Recent Trading Activity#
Bank of America (BofA) has reported that its clients were net sellers of U.S. stocks last week. This trend was largely influenced by significant outflows from Exchange-Traded Funds (ETFs), which outweighed modest inflows into individual stocks. Hedge funds played a major role in this selling activity.
ETF Outflows vs. Stock Inflows#
According to strategist Jill Carey Hall, clients experienced approximately $1 billion in outflows from equity ETFs, while only $16 million flowed into single stocks. This marks a shift from the previous week, which saw strong buying activity. Hedge funds have now been net sellers for four consecutive weeks, while private clients also shifted to selling after two weeks of purchasing.
Sector Performance#
The data indicates a continued weakness in smaller companies, with clients selling both large-cap and small- and micro-cap equities. Small and micro-cap stocks have faced selling for seven straight weeks, although large-cap single stocks still attracted some inflows. BofA noted that clients purchased stocks in eight out of eleven sectors, with the Industrials sector seeing record inflows, the highest since 2008. Other sectors like Consumer, Technology, and Communication Services also experienced multiple weeks of inflows.
Notable Sector Trends#
On the downside, the Financials sector faced the largest outflows, continuing a 10-week streak of net selling. Energy stocks also saw significant outflows for the second consecutive week, despite ongoing geopolitical tensions. However, investors continued to invest in Energy ETFs. Hall highlighted that eight out of eleven sectors saw ETF inflows, particularly in Materials, Industrials, and Energy.
ETF Buying Trends#
Lastly, clients sold Blend ETFs, marking the largest outflows since early 2023. In contrast, buying in Growth and Value ETFs remained steady, with mid-cap ETFs being the only segment to see inflows during this period.