Investors Flood $40 Billion Into Equities Over Two Weeks, Fueling S&P 500's Strongest November Since 1980

Investors have injected a staggering $40 billion into equities over the past two weeks, propelling the S&P 500 index to its most robust monthly performance in 2023.

Bank of America’s chief strategist, Michael Hartnett, revealed these staggering numbers in a note to clients on Friday.

The year 2023 has seen an influx of capital into equities. A whopping $143 billion has been funneled into this asset class, alongside an additional $42 billion poured into tech funds, according to Bank of America.

This surge in equity-related investments reflects a widely-shared confidence in the market’s ability to rebound following the tumultuous events of 2022.

Chart: S&P 500 On Track For The 2023’s Best-Performing Month

Scores On The Board: A Remarkable Equity Rally

The S&P 500 index has experienced an impressive 8.7% increase thus far in November, marking its strongest monthly performance since July 2022.

Looking at the returns in November, the last time the S&P 500 boasted such a robust gain in this month of the year was in 1980 when it rallied by 10.2%.

Friday saw major U.S. averages closing out their fourth consecutive week in the green, signifying the longest winning streak since June of the same year.

Notably, the SPDR S&P 500 ETF Trust SPY, the largest exchange-traded fund tracking the S&P 500, has generated returns of 18% year-to-date, nearly doubling the 30-year yearly average for the index, with more than a month still left in the year.

Tech stocks have outperformed even further, with the Invesco QQQ Trust QQQ surging by 45% year-to-date.

A substantial 74% of the stocks that make up the S&P 500 index are now trading above their 50-day moving average, signaling broad market strength.

Additionally, 53% of S&P 500 stocks are trading above their 200-day moving average, highlighting the sustained momentum in the market.

Caution Amid Exuberance

As all-time highs loom tantalizingly close, the Nasdaq 100 sits less than 5% below its peak from November 2021, while the index tracking the 500 largest U.S. corporations needs only a 6% rally to set new record highs.

However, amidst this exuberance, signs of caution have emerged.

Bank of America’s proprietary “Bull & Bear Indicator,” which takes into account a wide range of metrics to assess market sentiment from a contrarian perspective, has now exited its “Buy” zone, suggesting a potential shift in investor sentiment.

All of Bank of America’s proprietary trading rules have entered “Neutral” territory, reflecting the need for prudence in these times.

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