Investors ditch US stocks in 'bull crash': Bank of America

Investors' uber bullish sentiment for US stocks came to a screeching halt implicit the past month.

Bank of America's latest Global Fund Manager Survey of 171 participants conducted successful March showed the biggest monthly driblet successful investors' allocation to US equities connected record, with the allocation falling 40% month-over-month. As precocious arsenic December, investors' allocation to US stocks had been astatine an all-time high.

A squad of Bank of America strategists led by Michael Hartnett described the determination successful the March survey arsenic a "bull crash," with capitalist appetite for US stocks tumbling amid the 10% drawdown successful the S&P 500 (^GSPC) implicit the past month. The rotation went into cash, per Bank of America's survey, not bonds.

The swift quality of the correction successful the S&P 500 could beryllium seen arsenic a bargain sign. But arsenic Hartnett's squad points out, the caller marketplace moves are much a flushing retired of uber bullishness alternatively than an evident catalyst for a contrarian trade. For instance, investors' portfolio allocation to currency roseate from 3.5% to 4.1%, the largest 1 period emergence since December 2021. But inactive currency levels stay good beneath the much than 6% level seen successful October 2022 erstwhile Wall Street's statement telephone projected an incoming recession.

Hartnett wrote the existent sentiment levels are obscurity adjacent "close-your-eyes-and-buy levels."

And arsenic Wall Street strategists person pointed retired recently, portion of the crushed close present mightiness not beryllium an evident "buy the dip" infinitesimal comes backmost to what sent stocks down successful the archetypal place.

A illustration successful BofA's survey shows 55% of respondents judge the biggest hazard to markets is that the "trade warfare triggers planetary recession." This marked the highest condemnation successful a hazard since the pandemic topped the database successful April 2020.

But contempt a astir 3% popular successful stocks implicit the past 2 sessions, not overmuch has changed successful the commercialized warfare oregon maturation scare communicative implicit the past week.

Morgan Stanley main concern serviceman Mike Wilson told clients connected Sunday that "a tradable rally" is imaginable successful markets. But Wilson doesn't spot a sustainable rally to caller grounds highs "until the galore maturation headwinds are reversed" oregon the Fed resumes involvement complaint cuts.

The adjacent large trial for the markets is acceptable for Wednesday with the Federal Reserve's latest argumentation decision. With markets wide expecting the cardinal slope to clasp involvement rates steady, investors volition absorption connected immoderate clues astir erstwhile the cardinal slope could chopped rates again. Fed Chair Jerome Powell's property league is slated for 2:30 p.m. ET Wednesday.