Key Takeaways

Dip buyers came out in spades last week, according to client fund flow data from Bank of America.

BofA clients, including institutional investors and corporate clients, were net buyers of U.S. equities for a seventh consecutive week last week. They bought up individual stocks and ETFs as the benchmark S&P 500 slid into a correction for the first time since 2023.

Private clients were buyers for a 14th straight week, their longest start-of-year buying streak in data going back to 2008. Institutional clients returned to buying after two weeks as net sellers. Hedge funds , meanwhile, stuck to selling for a fifth straight week.

Last week's sell-off came amid mounting recession fears. Investors and economists are antsy that tariffs could slow economic growth and raise prices , increasing the risk of the U.S. economy entering a period of " stagflation ." Consumers have also grown fearful of tariffs— inflation expectations have soared in recent months, causing consumer confidence to drop to its lowest level since 2022 .

BofA Clients Bought More Cyclical Than Defensive Stocks

However, much of last week's equity buying ran counter to the narrative driving the market. BofA clients bought more stocks in the consumer discretionary and other cyclical sectors than in defensive sectors. Consumer staples, a classic defensive sector , was one of just two sectors that investors sold last week. On the flip side, cyclicals led the buying. Energy recorded its biggest week of inflows since March 2023, and tech saw its biggest inflows since July 2023.

Small-cap ETFs, however, saw their largest outflows since July 2022, suggesting some caution among investors. Small caps tend to be more sensitive than large caps to slowdowns in consumer and business spending.

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