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BOFA CLIENTS RETURN TO EQUITIES, LED BY INSTITUTIONAL BUYING

BofA equity and quant strategist Jill Carey Hall says investors waded back into U.S. equities last week as the S&P 500 .SPX rose 1.4%. Clients were net buyers overall, driven by both single stocks and ETFs. Individual equities drew about $1.1 billion -- the first inflows in three weeks -- while equity ETFs extended their run to a tenth straight week, with $2.2 billion coming in.

Institutions did most of the buying and have now been net buyers for five consecutive weeks. Meanwhile, hedge funds flipped to sellers after buying the prior week, and retail investors also sold for a second straight week. Even so, flows were broad, with clients adding exposure across all market-cap segments.

On the corporate side, buybacks slowed slightly week-over-week, but the trend is improving. The four-week average is now up 44% year-over-year -- the first increase since early 2025. That said, buybacks as a share of market cap remain below typical levels, and on a trailing basis they’re still at their lowest since late 2023. Activity has been weakest in Tech, while picking up in Consumer Discretionary, Financials, and Energy.

Looking at sectors, clients bought stocks in seven of 11 groups, led by Industrials. Real Estate and Energy also saw strong inflows, with Real Estate now on a five-week buying streak -- the longest of any sector. Healthcare had the biggest outflows, followed by Consumer Staples, suggesting, in Hall’s view, a tilt toward cyclicals over defensives. Communication Services extended its outflow streak to four weeks, while Tech saw only modest inflows after prior selling.

In ETFs, investors favored growth and blend funds, with value ETFs seeing their first outflows in four weeks. Buying spanned most size segments, except mid-caps. Sector ETF flows were led by Consumer Discretionary, while Financials and Industrials saw the largest outflows.

(Terence Gabriel)

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