Trump says Iran war "close to over" amid hopes for more negotiations
Investing.com -- U.S. equity markets saw their first week of net inflows since early March last week, Bank of America said, though the buying was driven entirely by exchange-traded funds (ETFs) as the bank’s clients continued to sell individual stocks for a fourth consecutive week.
BofA said clients were "small net buyers of U.S. equities" in the week ending April 10, during which the S&P 500 rose 3.6% following a two-week ceasefire agreement. Equity ETFs attracted $2.9 billion in net inflows — their third consecutive week of buying — while single stocks saw net outflows of $2.6 billion.
Hedge funds were the primary driver of last week’s buying, purchasing equities for the first time in three weeks. Institutional clients, who had been net buyers the prior week, resumed selling, and retail clients were net sellers for a fifth straight week, BofA noted.
"Clients sold equities across large and mid caps but bought small/micro caps (biggest inflows since late Nov)," it said.
Meanwhile, corporate buybacks accelerated week over week, though the trailing 52-week buyback total as a percentage of S&P 500 market cap continued to fall and now sits at its lowest level since November 2023.
At the sector level, clients sold stocks in six of eleven sectors. Financials saw the largest single-stock outflows, a reversal from the prior week when the sector drew large inflows ahead of earnings.
Healthcare and Technology recorded their third consecutive week of outflows each. "Note that Tech is still expected to drive growth this earnings season," BofA said.
Utilities continued a notable streak of selling, extending outflows to four straight weeks. The sector’s four-week average net flow as a percentage of S&P 500 Utilities market capitalization has fallen to its lowest level since October 2019, BofA noted. This is surprising given that both Utilities and Energy tend to outperform in stagflationary environments.
Clients have also continued to sell Energy stocks since the start of the Iran conflict, though they have been buying Energy ETFs throughout that period.
Industrials and Materials recorded their largest inflows following four weeks of outflows from both sectors. Consumer stocks also saw inflows for the first time in four weeks. Technology maintained rolling four-week average inflows for a seventh consecutive week, even as weekly single-stock flows were negative.
In the ETF market specifically, clients bought across most major style and size categories. Blend ETFs attracted the largest inflows among style buckets, followed by Value and Growth.
By size, large-cap ETFs led inflows, while small-cap ETFs saw outflows despite net buying in small-cap single stocks.
Energy and Materials ETFs led sector-level inflows, while Technology and Communication Services ETFs saw net selling. Clients sold Utilities ETFs for the first time in six weeks.