Investors Start 2024 with Record $123 Billion Cash Shift: Bank of America Report

Investors started 2024 by moving a whopping $123.1 billion into cash, the most significant shift since March 2023, according to a report from Bank of America on Friday.

This big move, which the bank noted is typical for the first week of the year, comes after a record inflow to cash in 2023, totaling $1.3 trillion. Investors played it safe amid uncertainty, favoring safe assets as higher interest rates tempered their enthusiasm for stocks.

Citing data from EPFR, Bank of America disclosed that investors put $10.6 billion into bonds and $7.6 billion into stocks. However, they pulled back $0.8 billion from gold. It's the second week in a row with equity inflows, and eight out of the last ten weeks have seen total inflows reaching $82 billion.

Despite a nine-week winning streak for global equities, expectations of reduced central bank rate cuts led to a 1.1% decline in the benchmark S&P 500 over Wednesday and Thursday. The index had surged around 14% since the end of October.

Bank of America commented, "Fed and yields dictating credit and stocks." Energy stocks faced their seventh consecutive week of outflows, with the largest since July 2023, totaling $1.0 billion. U.S. small-cap stocks, however, recorded their fifth straight weekly inflow of $2.3 billion.

Bank of America's bull & bear indicator, a measure of market sentiment, rose to 5.3 from 5.0, reaching the highest level since November 2021. Despite this increase, it stayed at a neutral signal. Bank of America pointed to equity breadth, credit technicals, and robust high-yield inflows as factors contributing to the indicator's movement.

Also Read: Bank of America Forecasts S&P 500 Surge to Record High in 2024