Corporate buybacks are experiencing a notable acceleration, marking the second-largest inflows since 2009 and surpassing seasonal levels for the fifth consecutive week, according to Bank of America strategists.
Year-to-date, corporate client buybacks account for 0.22% of the S&P 500 market cap, reaching levels comparable to those seen in 2022. Notably, the technology and communication services sectors led the inflows, maintaining positive momentum since October.
In contrast, the first week of December witnessed the first equity outflows since October, with clients being net sellers of U.S. equities amounting to $1.0 billion. Institutional and hedge fund clients were particularly notable as net sellers of single stocks, continuing a four-week trend for hedge funds. Private clients, on the other hand, turned into net buyers after significant outflows the previous week.
The sector-wise breakdown revealed that clients sold seven of the 11 sectors, with health care experiencing the fifth consecutive week of outflows, the largest since August. Conversely, materials saw the largest outflow since August.
“We are more positive on cyclicals, and our sector views have a cyclical tilt,” analysts at Bank of America said.