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A massive $17.5 billion has been taken out of global equities by investors
Investors just pulled a massive $17.5 billion out of global equities. They’re just getting started, says Bank of America.

Better returns generated by staying invested than timing the market: Study | Business Standard News

Image: Business Standard

That’s a question posed by strategists at Bank of America, who noted Friday that investors pulled $17.5 billion out of global equities over the past week, making for the biggest weekly outflow so far this year.

They cautioned that those outflows could well deepen. Since Nov. 2021, Nasdaq peak inflows to stocks have occurred in 16 of 20 weeks, for a total of $229 billion, while private clients bought stocks 17 out of 20 weeks, pointed out Bank of America’s Michael Hartnett, who provided the below chart:

Image: BofA

Investors also pulled $8.7 billion out of bonds and $55.4 billion from cash, pouring $900 million into gold. That was before Friday’s stock-market rout, which saw the S&P 500 SPX, -2.77% slump 2.8% and the Dow Jones Industrial Average DJIA, -2.82% plummet 981.36 points, or 2.8%. The S&P 500 is down 10.4% year to date, while the Dow is off 7%. The tech-heavy Nasdaq Composite COMP, -2.55% is down 17.9% so far in 2022, after a 2.5% Friday drop.

Breaking down some of the equity outflows, Bank of America strategists noted data showing Europe saw the 10th straight weekly outflow — $2.9 billion, while $1.6 billion exited financials, as money flowed back into buying the technology sector dip. Materials, meanwhile, marked a record 8-weeks of inflows.

Image: BofA

Market Effect

Stock-market weakness picked up Friday where Thursday’s selloff left off, when equities tumbled into the afternoon after Powell added his support for moving faster on raising interest rates to cool inflation, measures that would include a possible 50 basis point interest rate hike in May.

Powell’s remarks appeared to make a half percentage point rate hike the base case, with the central bank also likely to announce the beginning of the unwinding of its balance sheet, Kramer said.

Meanwhile, traders of fed funds futures have priced in a 94% chance that the Federal Reserve will deliver a 75 basis point rate hike in June, up from 70% on Thursday and 28% a week ago, according to the CME FedWatch Tool.

Stocks trimmed losses somewhat in afternoon activity after Cleveland Fed President Loretta Mester, in a television interview, said she remained in favor of 50 basis point rate increases, but saw no need for the “shock” of a 75 basis point increase. The bounce proved short-lived, however, with stocks falling to new session lows ahead of the closing bell.

How did stocks trade?

The Dow Jones Industrial Average DJIA fell 981.36 points, or 2.8%, to close at 33,811.40, after declining 1,019 points at its session low. The blue-chip gauge saw its steepest one-day percentage loss since Oct. 28, 2020.

The S&P 500 SPX dropped 121.88 points, or 2.8%, to end at 4,271.78.

The Nasdaq Composite COMP finished at 12,839.29 after a drop of 335.35 points, or 2.6%. The S&P 500 and Nasdaq each suffered their biggest one-day drops since March 7.

The Dow and S&P 500 on Friday posted their lowest finishes since March 15, while the Nasdaq closed at its lowest since March 14.

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