BofA clients continue to be net sellers of equities despite tech buying By Investing.com

By Senad Karaahmetovic

Despite the closing nearly 1.5% higher last week on the back of the softer-than-expected U.S. wage growth, Bank of America’s clients were taking the opposite side.

All three client groups – institutional, retail, hedge funds – were selling, marking the 3rd consecutive week of net outflows from U.S. equities ($1.4 billion). Outflows were mostly driven by ETFs as clients were buying single stocks.

Institutional players led the selling while private clients sold stocks for the fourth week in a row. This is contrary to historic patterns that suggest retail is buying stocks in January.

As far as individual stocks are concerned, BofA’s clients were buying stocks in 7 out of eleven sectors, led by Tech. According to the firm’s equity strategists, the Technology, Media, and Telecom (TMT) sector, in addition to Communication Services, generated 2x the inflows of all other sectors in 2022.

“Health Care saw the biggest outflows, with the biggest sales since Sept. and outflows for a fourth consecutive week. We remain most cautious on small cap Health Care, which is much risker than it was a year ago and looks worse-positioned today than heading into prior recessions,” they added in a note.

Financials were also a popular destination for inflows last week. This sector now ranks No.1 in BofA’s S&P 500 tactical sector ranks and second in the small-cap sector ranks.