① Last week, the US stock market fluctuated sharply due to concerns about an "AI bubble," but Wall Street hedge funds and institutional investors bought heavily, indicating their optimism about the prospects of US stocks; ② Funds mainly flowed to the consumer discretionary and healthcare sectors, while the technology sector still faced the predicament of capital outflows.
Last week, US stocks experienced significant volatility as concerns about an "AI bubble" intensified. However, Bank of America... The latest customer traffic data shows that Wall Street hedge funds and institutional investors, known as "smart money," are taking advantage of this opportunity to buy heavily, indicating that "smart money" remains optimistic about the overall prospects of the US stock market.
However, the funds from "smart money" mainly flowed into sectors such as consumer discretionary and healthcare, while the highly valued technology sector still faces the predicament of capital outflow.
Hedge funds are buying heavily.
Last week, the S&P 500 fell 1.9%, and the Nasdaq... The index fell 2.74%. However, during this period, US stock ETFs recorded a large inflow of funds, which even exceeded the scale of the sell-off of individual stocks, so that the overall flow of client funds observed by Bank of America was still positive.
Bank of America reported that US equity ETFs saw inflows of $4.8 billion, marking the sixth consecutive week of buying. However, individual stocks experienced outflows of $3.2 billion, continuing the outflow trend for the fourth consecutive week.
Hedge funds were the strongest buyers, increasing their holdings in both individual stocks and ETFs, marking "the largest inflow of hedge funds since June 2023, or since the market capitalization normalization in August 2024."
Meanwhile, institutional investors are also buying on dips, although their trading activity is entirely driven by ETFs.
Private clients are typically the most stable group among bargain hunters, but last week, their stock sales exceeded their ETF purchases, making them net sellers for the third consecutive week.
Technology stocks remain under pressure
By sector, technology stocks continue to face the greatest selling pressure: US technology stocks have seen their largest outflows for the sixth consecutive week. Bank of America points out that the average outflow from technology stocks over the past four weeks is now "at its largest level in history, or the lowest level since June 2021 when technology market capitalization normalized."
Meanwhile, communication services The industry has also experienced capital outflow.
On the other hand, consumer discretionary stocks saw the largest inflows, followed by industrial and healthcare stocks.
ETF activity also revealed a similar divergence—mixed and value funds attracted significant inflows, while growth ETFs experienced sell-offs. Technology ETFs saw the largest outflows across all sectors, while healthcare and financial ETFs saw the strongest inflows.
Meanwhile, corporate buybacks rose for the third consecutive week, reaching an eight-week high. However, since March of this year, the ratio of buybacks to market capitalization has been declining over the past 52 weeks, and is currently at its lowest level since early 2024.
(Article source: CLS)
