Wall Street rises as materials and crypto stocks offset continued bond sell-off
Investing.com -- Bank of America (BofA) strategist Michael Hartnett said equities may need "two exogenous shocks" to push meaningfully higher from current elevated levels.
In the latest Flow Show report, Hartnett said that risk assets would likely require a “regime change in Middle East to secure abundant future oil supply and collapse in oil price” alongside a “Trump-Xi U.S.-China trade deal in April to reduce tariffs and improve Trump approval rating.”
Hartnett said positioning and profit expectations are flashing contrarian signals, noting that “positioning (extreme bull) & profits (consensus = boom) both say ‘sell’ stocks & credit; policy (tax & rate cuts) says ‘buy-any-dip.’”
On sentiment, the firm’s Bull & Bear Indicator eased to 9.4 from 9.5 but remained firmly in “extreme bull” territory. The elevated reading reflects sustained inflows to global stock ETFs and tech funds alongside strong global equity breadth, Hartnett said.
Historically, such levels have been associated with weaker near-term returns. The strategist noted that in past instances when the indicator rose above 9.5, the median three-month drawdown was about 4.3% for the MSCI All-Country World Equity Index, 5.5% for the S&P 500 and 8.6% for the Nasdaq.
Flow data still showed solid risk appetite. In the latest week, equities drew $35.2 billion, bonds took in $26.4 billion and cash funds attracted $23.8 billion. Gold funds saw $1.4 billion of outflows — the largest in four months — while crypto funds lost $0.8 billion.
In other notable trends, BofA highlighted record four-week inflows into international equities of $64.6 billion and the largest six-week inflow ever into Korean equities.
Moreover, the bank said that for every $100 entering global equity funds in 2026, U.S. stocks captured just $26 — the lowest share since 2020 — indicating the U.S. exceptionalism theme is fading via reduced relative inflows rather than outright outflows.
