(Bloomberg) — Investors flocked into equities at the fastest pace in almost two years, according to Bank of America Corp.’s Michael Hartnett, as wagers of peak interest rates grow.
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Global stock funds have seen inflows of about $40 billion in the two weeks through Nov. 21 — the most since February 2022, Hartnett wrote in a note, citing EPFR Global data. Still, cash funds remain the winner with additions of nearly $1.2 trillion so far in 2023, compared with $143 billion into equities, while bond funds broadly registered outflows.
Hartnett has remained bearish on stocks even as the S&P 500 rallied nearly 19% in 2023. The index is now up nearly 8.7% in November, one of the best performances in the last century, as investors bet the Federal Reserve could finally be done raising interest rates.
An improvement in the breadth of the rally, combined with stronger inflows into equities as well as high-yield and emerging market bonds, means that a custom Bank of America bull-and-bear indicator is no longer flashing a contrarian buy signal, Hartnett said. Still, other market strategists are getting more optimistic about the outlook for US stocks, with teams including at RBC Capital Markets predicting a record high for the S&P 500 in 2024.
Bank of America’s own quantitative strategists, led by Savita Subramanian, are also in the bullish camp as they expect that US companies have adapted to higher rates and weathered a macroeconomic jolt. Hartnett, on the other hand, has previously said he expects bonds to outperform next year.
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Source: finance.yahoo.com