LIVE MARKETS-BofA clients keep connecting with communication services

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BOFA CLIENTS KEEP CONNECTING WITH COMMUNICATION SERVICES

BofA Securities equity and quant strategist Jill Carey Hall says that last week, with the S&P 500 index .SPX slipping by just 0.1%, clients were net buyers of U.S. equities for a third week in a row, driven entirely by equity ETF inflows (+$2.3 billion) vs. small single stock outflows (-$0.1 billion).

Buying was driven by institutional clients and private clients, while hedge funds were sellers for the first time in eight weeks.

According to Hall, inflows were driven by large caps for the second straight week. In fact, she says that the rolling four-week average flows for large caps (stocks + ETFs) were positive for the first time since mid-December. Mid and small/micro cap stocks saw outflows (but ETF inflows).

Corporate client buybacks slowed week-over-week and have been tracking below their seasonal average for most of 4Q earnings season. Additionally, trailing 52-week buybacks as a percentage of market cap are at their lowest since December 23 and below the long-run average since 2010.

Hall says buying was led by record inflows into Communication Services stocks (sixth week of inflows). Tech also saw inflows for only the second week so far this year. Clients bought Industrials for the first time in nine weeks amid the ISM inflection.

She notes that Staples captured inflows for the fifth straight week with the rolling four-week average flows hitting a new high for the second week.

Consumer Discretionary and Financials saw the biggest outflows.

In terms of ETFs, Hall says clients snapped up ETFs across major styles (Growth, Value and Blend) and sizes (Small, Mid, Large, and Broad Market). Notably, equal-weighted ETFs saw their largest inflows since BofA began tracking more detailed ETF data in August.

Clients bought ETFs in eight of the 11 sectors, led by Financials (biggest inflow since November 2024 despite Financials stock outflows last week) and Tech.

Only defensive sector ETFs (Staples, Healthcare and Utilities) saw outflows.

(Terence Gabriel)

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