BofA Global Research strategists said Friday that U.S. technology stocks just saw the biggest weekly inflows in nine weeks. The sector is making a comeback after its megacap-led rise lost steam by the end of May.
A group of strategists led by Michael Hartnett, chief investment strategist at BofA Global Research, said in a Friday client note that tech stocks saw inflows of nearly $1 billion in the week ending Wednesday. This was the biggest amount of money coming into the market in more than two months. The previous week, the same amount of money going out of the market.
Last week, investors kept putting money into stocks. In fact, U.S. equity funds received $4.6 billion, making it the seventh week in a row that they have received money. BofA experts say that utilities stocks also saw strong demand, bringing in about $1 billion during the same time period. This was the biggest weekly inflow for these stocks since January 2022.
Over the past week, the stock market has been led by the so-called “Magnificent Seven” group of megacap names. On Wednesday, the Nasdaq Composite COMP rose nearly 2% to a record close of 17,187 points, coming back from a 1.1% drop that made it its worst week in over a month, according to FactSet data.
Also on Wednesday, Nvidia Corp. NVDA, -0.09% saw its market value rise above $3 trillion for the first time ever. At the same time, Apple Inc.’s AAPL, +1.24% market cap went above $3 trillion. This was the first time since January that it closed at or above that level, according to FactSet data.
This week, Treasury yields went down, which helped the rise even more. Long-term rates for both the 10-year BX:TMUBMUSD10Y and the 30-year BX:TMUBMUSD30Y fell for five trading days in a row, reaching their lowest levels since March 28.
On Friday, though, this trend quickly changed because of unexpected growth in the U.S. job market, which made investors wonder again if the Federal Reserve would start lowering interest rates this year.
On Friday, the yield on the 10-year Treasury rose 14.8 basis points to 4.428%, and the rate on the 30-year Treasury rose 11.8 basis points to 4.547%, according to FactSet.
He and his team said that a rate cut by the Fed would be “the first sign of trouble” for the economy. Writers also said that since markets now expect the first cut to happen in the second half of 2024, the chances of a “hard landing” instead of a “no landing” for the U.S. economy could change.
The CME FedWatch Tool shows that buyers in Fed-funds futures were betting less on a September rate cut by the U.S. central bank on Friday. They now see a 46.7% chance, down from about 55% the day before.
After a huge May jobs report showed that the economy added a huge 272,000 jobs last month and the unemployment rate went from 3.9% to 4%, U.S. stocks ended the day lower.
Based on figures from FactSet, the S&P 500 SPX and the Nasdaq Composite both went down by 0.1% and 0.2%, respectively. The Dow Jones Industrial Average DJIA also went down by 0.2%.
