BofA Securities Reports Significant Net Buying of US Equities

BofA Securities noted that its clients were significant net buyers of US equities last week, with inflows totaling $6.4 billion.

This marks the fifth consecutive week of net buying activity and represents the sixth-largest weekly inflow since tracking began in 2008, and the highest since mid-September.

"Flows were nearly equally split between single stocks and ETFs (with a slight preference for the former), with both seeing inflows every week since the election,” noted BofA strategists led by Jill Carey Hall.

Institutional and hedge fund clients were active buyers; institutional clients purchased equities for the first time in two weeks, and hedge funds continued their buying streak for the third consecutive week.

Conversely, private clients turned into net sellers after being buyers in the prior week. Typically, private client outflows peak in December due to tax-loss selling.

Clients showed a preference for large- and mid-cap stocks, while small-cap equities faced selling pressure for the second consecutive week.

Corporate client buybacks have also accelerated, exceeding seasonal averages as a percentage of S&P 500 market capitalization. Year-to-date, corporate buybacks are on track to hit record levels as a share of market cap.

Sector Activity
– BofA reported that its clients purchased equities in eight out of eleven categories, with Technology and Communication Services leading the inflows. Both sectors have seen consistent buying for five and six weeks, respectively.
– Consumer Discretionary and Utilities have experienced steady buying since the election, while Industrials and Materials have recently gained traction.
– The rolling four-week average flows into Industrials are the most positive since early 2022, indicating potential optimism about a manufacturing rebound.
– Conversely, Staples, Financials, and Energy stocks faced net selling, despite some optimism around deregulation and mergers in Financials, which have seen outflows in three of the last five weeks.

In ETFs, buying was concentrated in Consumer Discretionary, Industrials, and Communication Services, while Staples ETFs led sector outflows.