By Senad Karaahmetovic
A Bank of America strategist Jill Carey Hall took note of the third consecutive week of outflows as far as the U.S. stock market is concerned.
Last week, during which the S&P 500 dropped 3.3%, the bank's clients were selling U.S. stocks ($1.9 billion outflows).
All three client groups - hedge funds, institutional, and retail clients - were selling both ETFs and single stocks. Retail led the selling with large/mid caps also sold while small caps were bought for the first time in a month.
"Clients sold stocks across five of the 11 sectors, led by Industrials, Tech and Real Estate. Amid a flat-lining ISM, rolling 4-wk. avg. sales of Industrials were the most negative since late 2020. Our Machinery team believes the ISM needs to fall further to induce true capitulation and improve risk/reward in the space," Carey Hall wrote to clients in a note.
Consumer Discretionary and Communication Services witnessed the largest inflows, Carey Hall added.
"Cyclical sectors in aggregate have now seen outflows for the last three weeks (after inflows most weeks since April), while defensive sectors have seen three consecutive weeks of inflows (after outflows most weeks since February)."
Moreover, the bank's data from the last week show that buybacks are decelerating after a "big pickup" in August.