According to Bank of America, by shuffling $123.1 billion into cash within a mere seven days, investors have set a cash influx record not witnessed since March 2023.
This lively cash shift, as narrated in a report by the multinational bank and investment services provider, is an incredible commencement for the year, especially during the first week.
Cash is King?
The $123.1 billion cash cascade witnessed from investors is not a blip, it's a continuation of the trend set in 2023. Last year saw an unparalleled yearly cash inflow of $1.3 trillion, as reported by Reuters, as prudent investors, wary of risks, sought refuge in the safe haven of assets, spurred by higher interest rates that tempered the allure of stocks.
Stocks and bonds continued to attract, with $10.6 billion for bonds and a flirtatious $7.6 billion for stocks. However, gold, normally everyone’s old favorite, and certainly loved by frequenters of Costco, was snubbed with dismissal of $0.8 billion.
Continued Inflows to Equities
In terms of equities , this marked the second consecutive week of inflows. Indeed, eight out of the past ten weeks have witnessed an inflow totaling a staggering $82 billion. However, global equities prepare to bow out of their nine-week winning spree, with investors retracting their bets on aggressive central bank rate cuts.
S&P 500 Stutters
As the S&P 500 flaunts its 14% growth since the end of October, it took a tumble of 1.1% over Wednesday and Thursday, eliciting investor jitters. The tantalizing prospect of imminent interest rate cuts from the Federal Reserve painted a shadowy backdrop, prompting Bank of America to declare, "Fed and yields dictating credit and stocks."
Energy stocks, like forgotten wallflowers, endured their seventh consecutive week of exits, marking the most substantial departure since the jubilant days of July 2023, with a whopping $1.0 billion farewell. In contrast, petite U.S. small-cap stocks pirouetted gracefully, recording their fifth consecutive weekly cash infusion – a charming $2.3 billion.
