- Stocks have been crushed lately, but investors have been net buyers for two straight weeks.
- Inflows into individual stocks were the largest since February.
- Here are the five sectors with the largest entries – and 10 stocks rated for buy in those sectors.
Investors bought the stock decline, according to new data from Bank of America, although it’s impossible to tell by looking at the dire price developments in the markets of late.
Bank of America clients have been net buyers of U.S. equities over the past two weeks, wrote Jill Carey Hall, U.S. equity strategist who leads BofA’s small and mid-cap investment strategy, in a note. of April 26. The S&P 500 was down 4.8% over that nine-session period.
Buying was driven by BofA’s institutional clients for the second straight week, Hall wrote, adding that retail clients were bottom buyers on a net basis for the first time in three weeks. Hedge funds, however, were net sellers of stocks for the eighth straight week, Hall noted.
Individual stock inflows — excluding buybacks — last week were the highest since February, Hall wrote, even as markets fell 2.8%. But exchange-traded funds (ETFs) made up of stocks fell for the fourth consecutive week despite value ETFs recording their 10th consecutive week of inflows.
Dip-buying was strongest in these 5 sectors
Eight of the 11 S&P 500 sectors saw net inflows last week, Hall wrote, although buying was particularly pronounced in five sectors: Technology, Health care, industrial, real estateand consumer discretionary. The financials, energy and materials sectors recorded small net inflows, while “bond sectors” such as utilities, consumer staples and communication services recorded net outflows as interest rates have rebounded, Hall noted.
The five sectors that saw the largest inflows last week are far from homogeneous. Technology and consumer discretionary are generally considered high growth sectors, while industrials and real estate often have a higher concentration of value stocks. the
has a mixture. Four of the five sectors are classified as cyclical – with the exception of healthcare, which is defensive.
Investors appear to be treating weakness in the tech sector — which matches the S&P 500’s 2.8% decline last week — as a buying opportunity. Net inflows into the sector were the highest among 11 sectors last week and were the most positive since February, marking the third straight week of accelerating buying in the sector, Hall noted.
Materials, meanwhile, may not have seen significant inflows, but the sector extended its streak of positive flows to five weeks – the longest active period of any sector. Along with industrials, materials saw the largest inflows so far in 2022, Hall noted.
The consumer discretionary sector has struggled this year, but there is reason to believe that the worst of the sector’s exits may have passed, Hall wrote. Consecutive weeks of influxes suggest BofA customers are dipping their toes back into the downed sector.
“Clients bought consumer discretionary stocks for the second week in a row after historically extreme outflows over the previous four weeks (and the largest outflows of any sector since the start of the year),” Hall wrote. in the footnote. “As we highlighted last week and the week before, these extreme outflows generally suggested that the performance of the sector could be close to the bottom.”
Although Hall didn’t share any investment recommendations in the rating, Insider recently compiled a list of 14 stock picks that have a Buy rating from Bank of America, and also beat earnings expectations. and earnings in the last quarter.
Ten of those stocks belong to one of the five sectors that saw the biggest inflows last week. All ten can be found below, along with their ticker, sector and