Investors Move Into Cash As Stock Markets Hit Record Levels

Investors are putting cash into money market funds at a record pace as stock markets around the world reach all-time highs, according to a report from Bank of America (BAC).

The report shows that cash is flowing into money market funds at the fastest pace on record as stock markets in Europe, Japan, and the United States trade at new highs.

Specifically, flows into cash were running at an annualized rate of $1.3 trillion U.S. in the week through Feb. 21.

That compares to $15 billion U.S. that flowed into stocks as markets reached new all-time highs in the past week.

The Bank of America survey also found that the current stock market rally is starting to broaden out beyond mega-cap technology companies.

U.S. small-cap funds have seen their largest weekly inflow since June 2022 at $5.1 billion U.S.

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The report states that investors seem to again be favoring cash with interest rates still elevated and looking less likely to decline in the near-term.

Investors put $15.20 billion U.S. into bonds in the past week, marking a 16th straight week of inflows into Treasuries, the longest such stretch since October 2021.

Bank of America’s “Bull & Bear” indicator is currently at 6.6. On a scale of 10, a reading above six indicates bullish sentiment towards stocks, while a reading of five or lower is a move into bearish sentiment.

The stock of Bank of America has declined 2% over the last 12 months to trade at $33.61 U.S. per share.