Record highs create major fatigue

As major U.S. equity indexes continued to rally to record levels in recent weeks, BofA Securities equity and quantity strategist Jill Carey Hall said that last week clients sold off stocks for the fourth straight week, with outflows from single stocks (-$0.8 billion) and equity ETFs (-$2.2 billion), the latter being the first outflow since April and the largest since January 2024.

According to Hall, all major client groups were net sellers, led by hedge funds with outflows for the fourth straight week, institutional clients were sellers for the third week in a row and private clients were sellers for the fifth time in seven weeks.

While the outflows were mostly in large-cap stocks, Hall said clients also sold mid-cap stocks but bought small-cap stocks, which is the only size segment to see inflows since Fed Chair Jerome Powell spoke in Jackson Hole.

By sector, Hall said clients sold shares in five of the 11 companies, led by SPF financials, which saw outflows for seven weeks, and communications services S5TELS, which saw outflows for three weeks in a row. For the financial sector, Hall said the next four-week average flows, “are the most negative since mid-November amid a weakening job market and investor credit concerns.”

Tech S5INFT saw the largest inflows, followed by S5REAS real estate and S5MATR materials.
Source: Reuters (Chuck Mikolajczak)