Behind the new highs of the US stock market, undercurrents are surging as Bank of America clients withdraw at the fastest pace in 10 weeks
Customers of Bank of America are withdrawing from U.S. stocks at the fastest pace in 10 weeks, with a total withdrawal of $1.3 billion. Despite the S&P 500 Index reaching a record high at the end of June, investors are gradually reducing their risk exposure, particularly with capital outflows in the industrial and real estate sectors. Technology stocks have seen inflows for three consecutive weeks, with clients increasing their holdings in financial stocks and consumer discretionary stocks. The market's risk-averse sentiment is rising, reflecting concerns about the sustainability of the rebound
According to the Zhitong Finance APP, Bank of America clients are withdrawing from U.S. stocks at the fastest pace in 10 weeks. As the S&P 500 index closed at a record level at the end of June and welcomed its best-performing quarter of 2023, investors are gradually reducing their risk exposure.
The bank's quantitative strategist Jill Carey Hall and others noted in a report released on Tuesday that last week, all major client groups, including institutional investors, retail traders, and hedge funds, collectively withdrew $1.3 billion from U.S. stocks. This sell-off occurred as the S&P 500 index rose 3.4% over five trading days, marking the first historical high since February.
Behind the rising market risk aversion is the increasing uncertainty among investors regarding the sustainability of this rebound, which has seen the S&P 500 index recover from tariff-related lows in April, and the benchmark index is now approaching the overbought zone since July 2024.
Hall mentioned that client sell-offs involved eight industry sectors, with the industrial and real estate sectors leading the decline, both of which have seen capital outflows for four consecutive weeks; the utility sector has faced sell-offs for six consecutive weeks, marking the longest selling period recently. She pointed out that former U.S. President Donald Trump's tax bill is currently under review in Washington, which may put pressure on utility and clean technology stocks.
Meanwhile, technology stocks have seen the largest inflow of funds for the third consecutive week. Hall emphasized that clients have also increased their holdings in financial stocks and non-essential consumer stocks. In the report, he wrote, "After two consecutive weeks of fund flows leaning towards defensive sectors, the overall net selling scale of defensive sectors by clients has exceeded that of cyclical sectors."
