For All Their Worries, Investors Are Piling Into US Stocks

(Bloomberg) — For all the talk of bear markets and a possible recession, investors continue to pile into American equities.

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US stocks attracted $14.8 billion in the week to June 15, their sixth consecutive week of additions, according to Bank of America Corp. strategists, who cited EPFR Global data. In total, $16.6 billion flowed into equities globally in the period, while bonds had the largest redemptions since April 2020 and just over $50 billion exited cash, the data showed.

Investor sentiment on equities has soured further this week, with the S&P 500 sinking into a bear market amid fears that aggressive interest-rate hikes would push the economy into recession. Bank of America strategist Michael Hartnett said that while markets look “painfully oversold,” rallies will likely be sold “until the rates shock can certify that an inflation shock is over.”

Alex Brazier, BlackRock Investment Institute’s deputy head, also said he doesn’t recommend buying the dip. “This is not a market where we come out into cash, but an environment where we’re more cautious,” he said on Bloomberg TV.

Hartnett said that based on past bear markets — defined as a 20% drop for the index from recent highs — the current one for the S&P 500 would end in October with the index at 3,000 points, 18% below current levels.

By trading style, US small caps led inflows with $6.6 billion in the latest week, while by sector, technology, materials, health care and utilities all saw additions. Energy, real estate and financials had the biggest outflows.