Smart Money Went Back to Selling After S&P 500 Rebounded Last Week

  • Hedge funds turned net sellers again after dip buying
  • Corporate buybacks dominated demand, followed by retailers

BlackRock's Moore Says Momentum Will Outperform Again This Year

Hedge fund clients at Bank of America Corp., who dumped stocks at a record pace in late January before diving back in as markets headed toward their Feb. 8 bottom, were back in selling mode during last week’s rebound.

As hedge funds resumed backing away, other clients stepped in, with the biggest source of demand coming from companies themselves, BofA strategists Jill Carey and Savita Subramanian wrote in a Wednesday note.

The data is more evidence that caution prevails among professional investors. A survey by Strategas Research Partners on Friday showed that 57 percent of money managers expect the S&P 500 to fall back below the intraday nadir of 2,533 reached Feb. 9.

Overall, Bank of America clients were net buyers of stocks for a second week, thanks to a pickup in corporate repurchases. Wealthy individuals continued to scoop up shares and institutional investors such as pensions turned net buyers for the first time in 16 weeks.

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