Bank of America Securities said its clients sold US stocks last week, unloading $3.9 billion after near-record buying the previous week.
While clients sold individual stocks, they increased their purchases of exchange-traded funds (ETFs). Mid-cap and small-cap stocks saw outflows, while large-cap stocks saw inflows.
All three major client groups—institutions, hedge funds, and retail clients—were net sellers.
BofA said institutional clients led the selling, offloading stocks for the first time in two weeks, while hedge funds sold off for the first time in four weeks. Private customers were net sellers for the third straight week, marking the biggest weekly outflow since November 2023.
Looking ahead, institutional clients could increase their stock sales as the Oct. 31 deadline approaches for most mutual funds to realize capital gains, according to BofA strategists. This group was net buyers month-over-month, but turned into sellers last week.
“Our flow data suggests evidence of tax loss selling by institutional investors in Oct (peak outflows) versus retail investors in Dec ahead of the 12/31 deadline for retail investors,” BofA said in the note.
Clients sold stocks in seven of the 11 sectors, with the largest outflows in the Financials, Staples, Tech and Health Care sectors. Financials posted their biggest weekly outflow since July. On the other hand, communications services recorded the largest inflows, maintaining their dominance since the beginning of the year.
Real estate has now seen six consecutive weeks of outflows, although it remains preferred for income and quality. Meanwhile, Energy has seen outflows in 12 of the past 14 weeks as BofA recently downgraded the sector to Market Weight, citing adverse oil supply/demand dynamics and weak earnings revisions.
Corporate buybacks remained strong, although they slowed last week, continuing to beat seasonal trends as a percentage of the S&P 500 market cap.
Meanwhile, ETF inflows were seen in most styles (Blend, Value and Growth) and most size segments (large, small and broad market), although mid-cap ETFs saw outflows.
Only three sectors—Real Estate, Utilities and Communications Services—showed ETF inflows, while consumer staples ETFs experienced the largest outflows.
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Reference;
Karaahmetovic, V. (2024) BofA clients sold equities last week, says institutional outflows could accelerate By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/bofa-clients-sold-equities-last-week-says-institutional-outflows-could-accelerate-3642524 (Accessed: 1 October 2024).
