Bofa: Clients offloaded $3.3 billion of US equities as Q2 earnings kick off

Bank of America Securities said its clients were net sellers of US equities last week, offloading $3.3 billion after the previous week’s substantial inflows.

The sales were primarily driven by single stocks, marking the biggest outflow since early April, while exchange-traded fund (ETF) inflows reached their highest level in eight weeks.

BofA said institutional clients led the selling after two weeks of buying, with private clients also selling for the first time in seven weeks. Hedge funds were the sole buyers, recording their largest weekly inflows since October 2023.

“Despite the rally in small caps, our clients’ net buying was chiefly in large caps,” analysts said in a note.

Corporate buybacks by BofA clients slowed over the last two weeks compared to recent levels but remained above typical seasonal levels as a percentage of the S&P 500 market cap for the 18th consecutive week.

Although many companies are in quiet periods ahead of earnings releases, they can still execute buybacks under 10b5-1 plan orders, BofA noted. Buyback activity typically accelerates over the next five weeks.

Financials experienced the biggest outflows among sectors last week, marking the third-largest financial outflow in BofA’s data since 2008 as earnings season began for major banks.

All sectors except Tech and Communication Services saw outflows, the note states, with Real Estate flows being essentially neutral. Communication Services has maintained the longest buying streak for the past 15 weeks, while Tech has enjoyed six weeks of inflows.

Meanwhile, Industrials faced their largest outflows since December, and Health Care saw the biggest outflows since May.

BofA said its clients purchased equity ETFs for the sixth consecutive week, with inflows across five of the eleven ETF sectors, led by Health Care ETFs. Tech ETFs saw the largest outflow.