Lucas Jackson / Reuters
- Bank of America on Friday said it would provide details of the inflow of funds into and out of the key-market sector, Bank of America said on Friday.
- Bank of America said U.S. stocks faced their third-largest fund inflow, with investors pulling .8 25.8 billion from equities in the past week.
- Technology stocks, which led the market to a record high on September 2, have seen their biggest fund-flow redemption since June 2019, according to Bank of America.
- The September stock market correction is part of a “topping process”, but don’t expect a major downturn as the Federal Reserve continues to pursue simple monetary policies, the firm said.
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Investors withdrew funds from U.S. stocks due to rising Kovid-19 cases and a lack of additional financial stimulus from Congress, Bank of America said in a note on Friday.
Investors pulled 25 25.8 billion from U.S. stocks, most of which 11 11.6 billion comes from large-cap stocks, Bank of America said.
Technology stocks, which have led the market to a record low since September 2, saw the fastest flow since June 2019, with 2019 1 billion in outflow.
Fund flow activity is part of the September “topping process”, but that doesn’t mean investors should expect a big bearish move in stocks, partly because the Federal Reserve’s monetary policy remains simple, and partly because there’s no irrational stimulus. Wall Street, Bank of America said.
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The Bank of America’s Bull & Bear indicator fell in recent weeks from 9. to 8.8, often below the “greed” reading associated with the top heavy market.
Instead, Bank of America said the stock-market correction is “healthier than risky.”
Tech and S.P.A.C. Areas of growth such as space are relentless, allowing the market to experience “heavy” trading by October and the end of the year.
Credit markets are what it comes down to in terms of calculating whether the stock market is a nasty reason to sell. As long as the spread doesn’t expand significantly and corporate-bond exchange-traded fund LQD has a price level of $ 15 to 2 2, Wall Street is “not a bear’s story” in the fourth quarter, Bank of America said.
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On Friday, the LQD ETF traded above 3% above $ 130, which is also consistent with its 200-day moving average. Traders will look to that level for support if the market does not really show widespread signs of weakness.
Investors, meanwhile, should not expect any record highs after this correction without rounds of additional financial and monetary stimulus from the Fed and Congress, the Bank of America said.
“We have the biggest financial stimulus behind us and without a clear MMT difficulty for the policy to generate a big reversal for stocks and credit in the months following the clear valuation,” the note said.
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