Bank of America clients have continued to buy the pullback in equities, according to the latest data for last week.
The bank’s clients were buying stocks in seven of the 11 sectors, with Technology and Real Estate leading the way for the third consecutive week. Consumer Discretionary has also seen inflows in eight of the last nine weeks.
Cyclicals have been receiving more positive flows compared to defensive sectors since early August.
"We became more positive on cyclicals this spring, and our sector views have a cyclical tilt," equity strategists at Bank of America wrote in a report.
Overall, there has been a significant influx of inflows into both single stocks and ETFs, marking the largest such inflow since August. BofA says that clients have been consistently buying U.S. equities for the 10th consecutive week, with inflows of $3.1 billion.
Hedge fund (HF) and retail clients have been leading these inflows, while institutional clients experienced outflows after seeing inflows in the previous week. HF clients, in particular, had their largest inflows since July.
There was a preference for large and small-cap stocks over mid-caps, and small caps have witnessed inflows in 13 of the last 15 weeks, suggesting the potential for a small-cap catch-up rally.
Corporate buybacks have been tepid, decelerating in the past week. Corporate client buybacks, as a percentage of S&P 500 market capitalization, have been below 2022 highs since May. With rising interest rates, there have been near-record outflows from the utilities sector.
On the ETFs front, the largest inflows since June were witnessed, with investments across all styles (Value/Blend/Growth ETFs) and sizes (Small/Mid/Large/Broad ETFs).
Value ETFs have seen inflows for 15 consecutive weeks, while Growth ETFs have experienced inflows for nine consecutive weeks. However, most sector ETFs have seen outflows, led by Energy ETFs, while Healthcare ETFs have attracted the most inflows.