The Fed delivered a best-case scenario for stocks: BofA
Investing.com | Author Vahid Karaahmetovic
Published Sep 20, 2024 16:18
Investing.com -- U.S. stocks saw their third-largest inflow of 2024, with $33.8 billion moving into the asset class last week, Bank of America said in a report Friday.
The U.S. large-cap sector was the key driver, attracting $26.2 billion. Notably, value stocks posted their largest inflow since December 2023 at $4.2 billion, while small-cap stocks saw inflows of $3.9 billion. Growth stocks followed with $1.9 billion in inflows.
Globally, equity funds attracted $38.6 billion, marking strong momentum across various regions. U.S. stocks led the way, while Japan saw $1.4 billion in inflows.
Emerging markets continued their positive streak with $1.3 billion, extending their run to 16 weeks of inflows. On the other hand, European equities registered their fourth consecutive week of outflows at $0.8 billion.
On the macroeconomic front, BofA strategists said that Wall Street “loves “panic cuts” when no panic,” referring to the 50-basis point interest rate reduction the Federal Reserve announced this week.
Strategists said the Fed opted for a more aggressive cut as it “wants to slash real rates to prevent recessionary small biz sector cutting jobs.”
They also argue that the Federal Reserve’s expected cuts, totaling 250 basis points, could fuel 15-20% earnings per share growth in 2025. BofA emphasizes that it doesn’t “get much better than that for risk so investors [are] forced to chase.”
Should the Fed manage to successfully orchestrate a “soft landing” for the U.S. economy, BofA sees international stocks and commodities as “best plays.”
The former are more attractively priced and are starting to outperform, strategists said. In addition, both international stocks and commodities “benefit from thaw in geopolitical tensions,” they added.
Meanwhile, the bond market recorded $15.5 billion in inflows last week, making it 39 consecutive weeks of positive flows.
Get The App
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.