Institutions, Retail Investors, and Corporate Buybacks Are Exiting US Stocks in Sync

Last week, the S&P 500 index rose by 4.5% for the week, closing at a historical high of 7,126.06 points, marking the strongest single-week performance since May 2025. However, clients at Bank of America have been continuously selling out.

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

Institutions and retail investors are fleeing in tandem. Institutional clients were the main sellers, with a weekly selling volume of $5.2 billion. Retail investors, on the other hand, have been net sellers for six consecutive weeks, setting the longest record of consecutive net selling since February 2024.

This data is in stark contrast to what Bank of America captured a month ago. For the week ending March 20, the S&P 500 index fell by 5.8% due to concerns over a war in Iran, with clients selling off $8.3 billion worth of individual stocks — yet at the same time, they massively bought a record-high $4.6 billion in technology stocks, marking the largest weekly inflow of technology stock funds in the 17-year history of this dataset. Now, such conviction has crumbled.

Amidst the widespread selling last week, the Energy Select Sector SPDR ETF (XLE) and other energy ETFs attracted $468 million in inflows for the week, marking the largest weekly inflow scale since March 2021 — at that time, the U.S. economy was at the end of the post-pandemic reopening trade, and vaccination efforts pushed investors to bet on a return to global demand.

Now, institutional investors are buying into energy ETFs amidst the collapse in oil prices. Brent crude fell by 12.6% on Friday alone, to $86.84 a barrel; WTI crude plummeted by 15.75%, to $79.78 a barrel. That afternoon, Iran announced the "full opening" of commercial navigation through the Strait of Hormuz.

Furthermore, corporate stock buybacks have also noticeably cooled down. So far this year, the buyback scale as a percentage of the S&P 500 market value has been mostly lower than the mean value during the post-financial crisis period, particularly lower than seasonal levels in the first three weeks of the earnings season — which is typically a period when buybacks accelerate. The technology sector in U.S. stocks has seen the most significant slowdown in buybacks, while the financial and energy sectors have experienced some recovery.

That is to say, the two most important categories of buyers in U.S. stocks, institutional clients and public companies themselves, are retreating in tandem as the U.S. stock index hits historical highs.

Only hedge funds, as a category, chose to buy U.S. stocks, with net inflows for the second consecutive week, amounting to $2.1 billion, the largest single-week net purchase in nearly four months, with purchases focused on the technology, energy, and non-essential consumer goods sectors.

Hedge funds are typically faster to react, more flexible in operations, and more willing to chase market momentum than pension funds, endowment funds, and mutual funds.

However, fund flow data shows that, if individual stocks and stock ETFs are combined, Bank of America clients' net selling scale reached about $1.5 billion, almost entirely driven by institutional clients. The 4-week rolling average of U.S. stock fund flows has now dropped to negative $160 million.

Analysis points out that hedge funds buying against the grain when institutional clients are selling is a typical late-cycle divergence signal