As the S&P 500 hits new highs, Bank of America clients are pulling out of U.S. stocks, with institutions, retail investors, and corporate buybacks all cooling down.

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Last week, the S&P 500 index rose 4.5% in a single week, closing at a historic high of 7126.06 points, marking the strongest weekly performance since May 2025. Meanwhile, Bank of America clients continued to sell.

According to a report released by Bank of America on Wednesday, for the week ending April 17, BofA clients were net sellers of US stocks, with single stock outflows reaching $5.1 billion, marking the fifth consecutive week of net outflows.

Institutions and retail investors are withdrawing in sync. The main sellers were institutional clients, with single stock sales totaling $5.2 billion. Retail clients have been net sellers for six consecutive weeks, setting the longest streak of net selling since February 2024.

This data is in stark contrast to what Bank of America observed a month ago. In the week ending March 20, the S&P 500 dropped 5.8% due to concerns about the Iran War, and clients sold $8.3 billion in single stocks—yet at the same time they bought a record $4.6 billion in tech stocks, the largest weekly inflow into tech in the 17-year history of the dataset. Now, that conviction has collapsed.

Despite widespread selling last week, the Energy Select Sector SPDR ETF (XLE) and other energy ETFs attracted $468 million in inflows, marking the largest weekly inflow since March 2021—when the US economy was reopening after the pandemic and vaccine rollouts led investors to bet on a global demand comeback.

Currently, institutional investors are buying energy ETFs against the trend as oil prices collapse. Brent crude dropped 12.6% in just one day on Friday, to $86.84 per barrel; WTI crude plummeted 15.75% to $79.78 per barrel. That afternoon, Iran announced that the Strait of Hormuz was “completely open” to commercial navigation.

Additionally, corporate stock buybacks have cooled noticeably. So far this year, buyback volume as a proportion of S&P 500 market cap has mostly been below the post-financial-crisis average, especially in the first three weeks of earnings season—the period when buybacks typically accelerate. US tech sector buybacks slowed most significantly, while financial and energy sectors saw some recovery.

In other words, the two most important buyers of US stocks—institutions and listed companies themselves—are both retreating as the US stock index hits historic highs.

Only hedge funds, in this category of clients, chose to buy US stocks, marking the second consecutive week of net inflows, with net buying reaching $2.1 billion, the largest weekly net buying in nearly four months. Purchases were concentrated in technology, energy, and consumer discretionary sectors.

Hedge funds usually react faster, operate more flexibly, and are more willing to chase market momentum than pension funds, endowments, and mutual funds.

The rally that corresponds to selling by institutional funds is one of the fiercest surges seen in recent years. The Nasdaq 100 index jumped 6.8% that week, recording its 13th consecutive day of gains on Friday, the longest streak since 1992. The Russell 2000 index hit a new record high, the first time small-cap stocks have set a record since January this year. Microsoft soared nearly 14% in a week, the biggest weekly gain since 2007; Tesla rose 15%.

However, fund flow data shows that if you combine single stocks and stock ETFs, BofA clients’ net selling reached about $1.5 billion, almost entirely driven by institutional clients. The 4-week rolling average of US stock fund flows has now dropped to minus $1.6 billion.

Analysis points out that hedge funds buying against the tide as institutional clients sell is a typical sign of late-cycle divergence: fast money chases breakout trades, while slow money quietly rotates out.

The market’s hesitation has its reasons. The S&P 500's forward 12-month PE ratio has risen to 20.9 times, higher than the five-year average of 19.9 times and the ten-year average of 18.9 times. Stock prices are rising much faster than earnings expectations are recovering.

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