Bank of America Clients Pull $6.9B from U.S. Stocks Despite S&P 500 Rally
Summary
Bank of America clients pulled $6.9 billion from U.S. stocks last week, the largest outflow since August 2023, despite the S&P 500 reaching record highs. Institutional investors and hedge funds led the selling across all 11 S&P 500 sectors, while private clients were net buyers. ETF flows showed a rotation from Growth to Value. Corporate buybacks hit an 8-month low. This broad-based selling, historically, has preceded strong market rebounds, indicating institutional caution amidst a bullish market.
Bank of America Clients Pull $6.9B from U.S. Stocks Amid S&P 500 Rally
Publication Date: July 8, 2025
Bank of America Securities reports a significant outflow of $6.9 billion from U.S. equities by its clients last week. This marks the largest weekly outflow since August 2023 and the sixth-largest since 2008, occurring despite the S&P 500's 1.7% rise to new record highs.
Who's Selling?
The exodus was primarily driven by institutional investors and hedge funds:
- Institutional investors reduced their exposure for 8 of the past 9 weeks.
- Hedge funds were net sellers for the third consecutive week.
- Conversely, private clients resumed buying, having been net buyers in 28 of the past 30 weeks.
BofA strategists Jill Carey Hall and Tyson Dennis-Sharma noted, "Broad-based sector selling like this hasn't happened since November 2022. Historically, it precedes strong market rebounds."
Sector Breakdown
All 11 S&P 500 sectors experienced net outflows, a rare occurrence last observed in late 2022. The heaviest outflows were seen in:
- Communication Services
- Technology
- Industrials
Utilities continued a losing streak with seven consecutive weeks of outflows, representing the most sector-specific selling in the first half of 2025.
ETFs: Value Rotation Continues
While individual stocks saw significant selling, ETF flows remained positive, indicating a continued rotation from Growth to Value strategies.
ETFs Bought:
- Blend and Value ETFs (5th straight week)
- Energy and Real Estate sector ETFs
- ETFs across all market-cap sizes
ETFs Sold:
- Growth ETFs (5th outflow in 7 weeks)
- Technology and Financial sector ETFs
Buybacks Hit 8-Month Low
Corporate share repurchases slowed to their lowest level since October 2023. However, BofA anticipates a rebound in buyback activity during the upcoming earnings season over the next six weeks.
Takeaway
Despite the bullish price action in major indexes, underlying client flows suggest institutional caution, ongoing sector rotation, and a divergence in sentiment between private and institutional investors. For contrarian investors, such broad-based selling has historically preceded strong short-term market rallies.