Something unusual is happening in one the most aggressive U.S. stock rallies in years.

Last week, the S&P 500 – as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – notched its strongest weekly gain since May 2025. Professional investors spent it selling.

Bank of America clients were net sellers of U.S. equities for the week ending April 17, with single-stock outflows reaching $5.1 billion — the fifth straight week of outflows, according to a report released Wednesday.

Institutional clients drove most of the selling with $5.2 billion in single-stock sales. Private clients sold for the sixth week in a row, the longest streak since February 2024.

Only hedge funds bought, with their second week of inflows and the biggest net purchase in four months.

The S&P 500 rose 4.5% over those five trading days, closing at a new all-time high of 7,126.06 on Friday. It was the index’s best week since May 2025.

A Complete Reversal From Four Weeks Ago

The data reveals a sharp inversion of what BofA captured just one month earlier.

In the week ending March 20, with the S&P 500 down 5.8% on Iran war fears, clients had dumped $8.3 billion in single stocks — but simultaneously poured a record $4.6 billion into Technology shares, the largest weekly Tech inflow in the 17-year history of the dataset.

Read also: Investors Dump US Stocks Like It’s 2008 Again — But Pile Into This Sector At A Record Pace

That conviction has now unwound.

Against that backdrop of broad selling last week, Energy Select Sector SPDR ETF (NYSE:XLE) and other Energy ETFs attracted $468 million of inflows in a single week — the largest weekly inflow into the group since March 2021, the tail end of the post-pandemic reopening trade when vaccine rollouts were pushing investors to bet on a return of global demand.

Institutional investors are now buying Energy ETFs into the teeth of an oil crash.

Brent crude fell 12.6% on Friday alone, to $86.84 a barrel. WTI plummeted 15.75% to $79.78. Iran had reopened the Strait of Hormuz that afternoon after declaring it “completely open” to commercial traffic. 

The Hedge Fund Signal

One group kept buying. BofA hedge fund clients were net buyers of U.S. equities for the second straight week, with $2.1 billion in net purchases — the biggest weekly hedge fund inflow in four months.

They bought both single stocks and ETFs, with Tech, Energy and Consumer Discretionary the top sectoral targets.

Hedge funds tend to be faster, more tactical and more willing to chase momentum than pensions, endowments and mutual funds.

Their buying alongside institutional selling is a classic late-cycle divergence: the fast money chases the breakout while the slow money quietly rotates out.

Why Investors Distrust This Rally

The rally that institutional money sold into was one of the most aggressive in recent memory.

The Nasdaq 100 – as tracked by the Invesco QQQ Trust (NASDAQ:QQQ) – rose 6.8% on the week and posted its 13th straight day of gains on Friday — the longest winning streak since 1992. The Russell 2000 hit a new all-time high, the first small-cap record since January.

Microsoft Corp. (NYSE:MSFT) jumped nearly 14%, its biggest weekly gain since 2007. Tesla Inc. (NASDAQ:TSLA) rose 15%.

And yet the flow data shows BofA clients selling roughly $1.5 billion more than they bought when counting both stocks and equity ETFs. Institutional clients drove almost all of it.

The 4-week rolling average of U.S. equity flows is now at negative $1.6 billion.

The hesitation has a reason. The S&P 500’s forward 12-month P/E ratio is now 20.9, above both the 5-year (19.9) and 10-year (18.9) averages. The rally has run faster than earnings estimates have risen to support it.

Corporate buybacks are also running colder than usual. Buyback flows as a percentage of S&P 500 market cap have been tracking below the post-GFC average most weeks this year, and particularly below seasonal levels in the first three weeks of earnings season, when they typically accelerate.

Buybacks have slowed most notably in Tech, even as they’ve picked up in Financials and Energy.

In other words, the two biggest natural buyers of U.S. stocks — institutional clients and corporations themselves — are both stepping back as the index prints new highs.

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