Bank of America Securities reported that its clients were net buyers of U.S. equities last week, injecting $4.6 billion into the market after a week of net selling. The move comes despite mounting concerns over DeepSeek’s AI breakthrough and escalating U.S.-China trade tensions, signaling investor confidence in the broader market outlook.
For the fourth consecutive week, single stocks saw inflows, while exchange-traded funds (ETFs) experienced net outflows. According to BofA strategists, this trend supports the expectation that 2024 will be a strong year for stock picking. Private clients remained net buyers for the eighth straight week, with January inflows reaching five times the usual levels for this time of year.
Financials and Health Care stocks led purchases among retail investors. Meanwhile, institutional and hedge fund clients continued their selling streaks, marking their third and ninth consecutive weeks as net sellers, respectively. Historically, both groups tend to be net sellers in January, but this year’s activity has been more pronounced.
Despite concerns over elevated valuations and interest rates, corporate buybacks have continued at record levels. January’s buyback activity was the highest for the month since 2010. Rolling 52-week buybacks relative to market capitalization also remain near historic highs, indicating that companies are confident in their stock values and are using repurchases to enhance shareholder value. Investors looking to analyze financials and shareholder returns can explore key insights using Owner Earnings API for a deeper understanding of corporate cash flows.
Client flows were largely positive across most sectors, with Communication Services seeing the second-largest inflow since its creation in 2018. Earnings surprises have been a major catalyst behind increased demand for these stocks. Investors can track earnings trends with the Historical Earnings API to gain insights into corporate performance.
Technology stocks also attracted significant inflows, despite ongoing concerns surrounding DeepSeek’s AI advancements. However, investor sentiment varied depending on the client group, suggesting a degree of caution in the sector.
On the flip side, Industrials posted the largest outflows for the fifth consecutive week, while Materials saw its third-largest outflow in BofA’s data history since 2008. Consumer Discretionary stocks were also net sold, reflecting concerns about economic resilience and shifting consumer spending patterns.
With strong buyback activity, continued earnings growth, and selective sector inflows, the market remains in a position of strength. However, the divergence in buying patterns between institutional and retail investors suggests that caution is still present. Investors can assess company financial health and sector trends using the Full Financials API to make data-driven decisions.
As geopolitical risks and macroeconomic conditions evolve, market participants will closely watch upcoming earnings reports, Federal Reserve policy moves, and potential tariff developments for further clues on equity market direction.
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