Overview#
Bank of America (BofA) has reported that its clients took advantage of a recent market dip last week, resulting in record inflows into individual stocks. Despite a decline in the broader market, clients were net buyers of U.S. equities.
Client Activity#
According to BofA strategist Jill Carey Hall, the S&P 500 index dropped by 2.8% last week, yet clients still invested heavily in stocks. This activity marked the highest level of single-stock inflows recorded since 2008. Additionally, equity exchange-traded funds (ETFs) attracted approximately $1.5 billion in inflows. Institutional investors were the primary contributors to this buying trend, marking the second-largest weekly buying activity on record. Private clients also participated, purchasing stocks in eight of the last nine weeks.
Stock Performance#
While large-cap stocks saw the majority of the buying, mid-cap stocks also experienced inflows. In contrast, smaller companies struggled, with small and micro-cap stocks facing outflows for the sixth consecutive week. Hall pointed out that the four-week average for small-cap flows is now the most negative on record, reflecting a significant shift from the strong inflows seen late last year.
Sector Insights#
In terms of sector performance, the Technology sector recorded the largest inflows since June, while Communication Services has seen consistent buying since late December. Consumer Discretionary stocks also saw inflows for the first time in six weeks. On the other hand, the Financials and Industrials sectors continued to lag, with Financials experiencing outflows for the ninth week in a row and Industrials for the fourth.
ETF Trends#
Overall, ETF flows were positive across various styles and sizes, with investors showing interest in growth, value, and blend funds. Notably, Energy ETFs saw their largest inflows since October 2023, and the four-week average of energy ETF inflows is the strongest since early 2022, coinciding with the onset of the Russia-Ukraine war.