Bank of America Clients Continue to Buy the Rally, New Data Shows

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Despite analyst warnings that the ongoing relief rally in equities is close to peaking, Bank of America clients have continued to buy U.S. equities.

Jill Carey Hall, the equity and quant strategist at BofA, noted that the bank’s clients were net buyers of U.S. equities for the sixth consecutive week. Last week, when the S&P closed nearly 0.4% higher, client inflows in stocks were $1.8 billion.

Consistent with recent weeks, clients were buying both single stocks and ETFs while the buying activity was mostly led by institutional clients. Retail clients have also continued to buy – for the sixth consecutive week – while hedge funds were net sellers.

“Clients bought stocks in four of the 11 sectors, led by Tech (largest weekly Tech inflow in our data history since ’08) and Communication Services. While most Tech companies have beaten expectations this quarter, we see risk that Tech may not prove to be as defensive as some investors expect; Nasdaq earnings revisions have continued to lag S&P 500 earnings revisions,” Carey Hall told clients in a note.

On the other hand, Health Care and Consumer Discretionary registered the biggest outflows, with the latter recording the biggest outflow since late June. BofA clients have also continued to buy energy stocks while Industrials currently has the longest selling streak.

“YTD, only Utilities & Health Care have seen cumulative outflows, suggesting clients do not yet appear to be allocating for a recession. Last week was the first time since June (and second time in the past 3mos) that aggregate flows into cyclical sectors were more negative (or less positive) than flows into defensive sectors,” the strategist concluded.