Investing.com -- Bank of America (BofA) reported the largest net outflow from U.S. equities by its clients since August, with $5.8 billion in net sales last week.
It marked the first time in eight weeks that clients were net sellers, even as the S&P 500 edged up 0.5% during its ongoing recovery from a correction. The selling was concentrated in individual stocks, while exchange-traded funds (ETFs) saw inflows.
Institutional and hedge fund clients both reduced equity exposure—institutions turning net sellers for the first time in two weeks, while hedge funds extended their selling streak to six consecutive weeks.
Private clients, however, remained buyers for the fifteenth straight week. According to BofA , this marks the "3rd largest inflow ever by this group," and represents "the longest start-of-year buying streak in our data since ’08."
The bank said its clients took advantage of the latest market pullback. Since 2010, clients have tended to buy during 10% S&P 500 corrections, with this year’s activity exceeding the historical average. These corrections of 10% or more have typically occurred about once per year, with the most recent one in 2023.
Meanwhile, corporate buybacks slowed for a third straight week and are now running below normal seasonal patterns, following elevated activity in January and February.
Tech stocks led sector outflows, with the largest single-week outflow since 2008, as clients pulled back from five of 11 sectors. Communication Services and Consumer Staples also saw significant selling.
At the same time, cyclicals outperformed defensives, suggesting clients are not positioning for a recession. Financials and Consumer Discretionary were net buys, with BofA highlighting Financials as one of the highest quality sectors currently.
ETF inflows were broad-based across style and size, excluding small caps, which were sold for a second consecutive week. Sector ETF outflows were led by Energy, while Tech, Materials, and Communication Services ETFs attracted inflows.