This post was originally published on this site
While the S&P 500 closed 3.4% lower last week, Bank of America’s clients continued to buy equities. The bank recorded the fifth straight week of inflows with clients buying both large and mid-caps, but selling small caps.
Buying was led by institutional clients and retail clients with the latter net buyers for the first time in six weeks. On the other hand, hedge funds were selling for the second consecutive week.
The buying activity was also strong in the Tech sector as investors continue to increase exposure to risky assets. Today’s weaker-than-expected CPI print is likely to further improve the risk sentiment.
BofA’s clients were mostly buying Health Care stocks, in addition to Tech, while selling Communication Services and the two Consumer sectors.
“Clients had been buying both Tech and Comm. Svcs. stocks since late summer, but have sold the latter the last three weeks. We are underweight both sectors, where fundamentals have deteriorated and we see cyclicality risk for Tech,” said BofA’s strategists.
The strategists remind investors that January tends to be the strongest month for equity inflows, led by retail buying.
