BofA: Institutional and Retail Investors Bought the Dip in U.S. Stocks
Institutional and retail investors returned to U.S. equities last week, ending a month-long stretch of selling, according to new data from Bank of America (BofA).
In a recent market note, BofA said clients were “net buyers of the dip” in U.S. stocks after four consecutive weeks of selling, as the S&P 500 declined 2.4%.
Massive Inflows Into Individual Stocks
Total inflows into single stocks reached $4.1 billion, marking the fifth-highest weekly inflow since 2008. However, equity ETFs recorded small outflows of around $200 million.
BofA reported that institutional clients led the buying activity, posting the largest weekly inflow since November 2022. Retail investors also re-entered the market after selling in four of the past five weeks.
Meanwhile, hedge funds continued selling U.S. equities, extending their streak to five consecutive weeks.
Broad-Based Buying Across All Sectors
The inflows were broad-based, as clients bought stocks across all 11 S&P 500 sectors, led by Communication Services, Health Care, and Energy.
The Energy sector saw its strongest inflows since March 2023, while institutional investors heavily accumulated tech stocks ahead of third-quarter earnings. The Tech sector is expected to deliver 20% year-over-year profit growth, compared with 3% for the rest of the S&P 500, BofA noted.
ETF Flows Turn Negative but Value and Small-Caps Shine
Despite overall negative ETF flows, investors favored small-cap and value-oriented funds.
“Clients sold equity ETFs for a second consecutive week,” BofA said, “but we saw larger inflows into value strategies and renewed interest in small-cap ETFs.”
Overall, the data suggests growing investor confidence in U.S. equities, with institutions leading the recovery in buying momentum.
