Investors are swarming back into the stock market at a near-record pace with equities in the middle of a rapid rebound, according to Bank of America. Inflows into single stocks, as a percentage of S & P 500 market cap, over the last three weeks were in the 99th percentile of history since 2008, Bank of America said. The Wall Street firm aggregated flows across many execution platforms and trading desks, and the data included hedge funds, institutional clients and private clients. Stocks staged a big comeback recently as investors reassessed the Federal Reserve’s tightening path. The major averages just had their biggest weekly gains since June last week, with the Dow Jones Industrial Average advancing 4.9%. The S & P 500 and Nasdaq rose 4.7% and 5.2%, respectively. Bank of America said its clients were net buyers of U.S. equities for six straight weeks with inflows into both stocks and ETFs. Buying was led by hedge fund clients and private clients, the bank said. “Most prior instances of extreme inflows following the Global Financial Crisis typically were preceded by extreme outflows in the several months prior – not the case this time,” said Jill Carey Hall, Bank of America’s equity and quant strategist, in a note. “Cumulative $ inflows YTD have also been the most positive in our data history.” Still, some on Wall Street don’t believe this rally has lasting power as the Fed still hasn’t taken inflation under control. Mohamed El-Erian cautioned investors on Monday that the market comeback is not supported by fundamentals.
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