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Key Takeaways
- Financial institution of America purchasers final week had been internet patrons of U.S. equities for the seventh straight week, shopping for up particular person shares and ETFs because the S&P 500 slumped into correction territory.
- Regardless of the latest sell-off being sparked by recession fears, strong flows into cyclical shares and out of defensive shares suggests traders aren’t positioning for a recession.
- Nonetheless, small-cap ETFs, which are usually extra delicate to the financial cycle than large-cap equivalents, noticed their largest outflows since July 2022.
Dip patrons got here out in spades final week, in line with shopper fund circulate knowledge from Financial institution of America.
BofA purchasers, together with institutional traders and company purchasers, had been internet patrons of U.S. equities for a seventh consecutive week final week. They purchased up particular person shares and ETFs because the benchmark S&P 500 slid right into a correction for the primary time since 2023.
Personal purchasers had been patrons for a 14th straight week, their longest start-of-year shopping for streak in knowledge going again to 2008. Institutional purchasers returned to purchasing after two weeks as internet sellers. Hedge funds, in the meantime, caught to promoting for a fifth straight week.
Final week’s sell-off got here amid mounting recession fears. Traders and economists are antsy that tariffs may gradual financial development and increase costs, rising the danger of the U.S. financial system coming into a interval of “stagflation.” Customers have additionally grown terrified of tariffs—inflation expectations have soared in latest months, inflicting shopper confidence to drop to its lowest stage since 2022.
BofA Shoppers Purchased Extra Cyclical Than Defensive Shares
Nonetheless, a lot of final week’s fairness shopping for ran counter to the narrative driving the market. BofA purchasers purchased extra shares within the shopper discretionary and different cyclical sectors than in defensive sectors. Shopper staples, a basic defensive sector, was one in all simply two sectors that traders bought final week. On the flip facet, cyclicals led the shopping for. Power recorded its largest week of inflows since March 2023, and tech noticed its largest inflows since July 2023.
Small-cap ETFs, nevertheless, noticed their largest outflows since July 2022, suggesting some warning amongst traders. Small caps are usually extra delicate than massive caps to slowdowns in shopper and enterprise spending.