Written by Louis Krauskopf and Yoruk Bahceli
(Reuters) – The company said in a note on Friday that strategists at BofA Global Research see a “problem” in the second half of technology stocks even as the sector got its biggest influx in 10 weeks.
The technology-driven Nasdaq Composite is up 28% this year, boosted by huge stocks and excitement about the trading potential of artificial intelligence.
Bank of America pointed to the relationship between the rise in central bank liquidity and the Nasdaq index over the past 15 years.
The strategists led by Michael Hartnett said in a note that central bank balance sheets have fallen by $3 trillion “but the Nasdaq wants new highs”.
“We say technology = the H2 problem rather than the era of new AI rules,” Bank of America said in the note.
Bank of America said that in its latest weekly data, the tech sector saw an inflow of $2.3 billion, its largest in 10 weeks.
More broadly, investors fled stocks in the week ending Wednesday, but continued to put their money into bonds as yields rose, Bank of America said, citing EPFR data.
Bank of America noted an inflow of $6.1 billion from equities and an inflow of $600 million into bonds.
Bank of America said the US Treasury market, where borrowing costs rose the most this month leading to losses for investors, had its 28th consecutive week of inflows, the longest streak since 2010.
At the same time, emerging market debt lost ground, Bank of America said, as it experienced its largest weekly outflow since the Silicon Valley bank collapse in March.
(Reporting by Louis Krauskopf in New York and Joruk Bahseli in Amsterdam; Editing by Dara Ranasinghe and Alistair Bell)