Turmoil in financial markets, with uncertainty surrounding the failure of three US banks and a major European bank, did not stop some investors from buying into the so-called decline in the stock market at one point last week. It is according to a weekly. A report released Friday from Vanda Research said retail investors pulled $1.43 billion into underperforming financial and energy stocks as well as some large-cap consumer tech names on Wednesday after two weeks of sluggish action. Amid concerns about the health of smaller lenders, they bought an “unprecedented amount” of too-big-to-fail banks, amounting to nearly $1 billion in retail flows into the financial sector over the past five days. Wanda’s chart shows net purchases over the past five days with financials revealed: Marco Icchini, senior vice president, Giancomo Pierantoni, head of data, and Lucas Mantle, data science analyst at Wanda, Charles Schwab SCHW, -2.54% were the second-most viewed. Flows in the wake of Bank of America last week. “Some entrepreneurs” were buying First Republic Bank , FRC, -32.80% PacWest Bancorp PACW, -18.95% and Truist Financials TFC, -7.23% , which they described as “risky bets that could potentially offer huge upside.” If there is a systemic risk may be held at bay. Stocks rose Thursday after federal authorities planned for major banks to invest $30 billion in First Republic Bank FRC, -32.80% and prevent a fourth banking collapse following the failures of Silicon Valley Bank, Signature Bank and Silvergate Bank over the past week. Shares of Credit Suisse CSGN, -8.01% , meanwhile, tumbled 25% last week, roiling global markets amid concerns about the Swiss banking giant’s own survival. Read: UBS and regulators rush to seal Credit Suisse takeover deal: The roller-coaster ride resumed on Friday, with financial pressures and First Republic shares plunging anew after reports the bank suspended its dividend and disclosed higher borrowing costs. Some of the biggest banks involved in that deposit scheme for lenders, such as JPMorgan Chase & Co., were also falling. JPM, -3.78%, Citigroup C, -3.00%, Bank of America BAC, -3.97% and Goldman Sachs GS, -3.67%. For the week, the Dow fell 0.1%, the S&P 500 rose 1.4% and the Nasdaq Composite rose 4.4%, according to Dow Jones Markets data.Schwab shares fell 3.9% last week, during which at one point executives were assuring shareholders that the broker was “in good shape.” remained CEO Walter Bettinger and other executives bought about $7 million worth of shares during last week’s market turmoil. Vanda analysts said part of that equity sector turnover was likely driven by profit-taking on the side of bond-themed exchange-traded funds (ETFs), which have shed $250 million over the past two weeks. . But that’s a delicate balance right now, with investors likely to continue buying stocks only if a “systematic crisis” can be avoided, analysts said. Read: Shares of Credit Suisse suffered their worst week since the 2008 financial crisis Read: Consumer sentiment fell for the first time in four months – and that was before Americans learned about SVB uncertainty about the Fed’s interest rate path, which sent bond yields volatile last week, sending the ICE BofAML Move Index to its highest level since 2008. Financial crisis until Wednesday. Investors pulled $8.8 billion out of prime money-market funds at Schwab last week, putting it into the broker’s government and treasury funds amid ongoing jitters about whether more shoes will drop in the banking crisis, Bloomberg reported, citing company data. Wanda said the energy sector also saw increased inflows after Tuesday’s market decline, though analysts said those were not the stocks that drew loyalty from traders, so if an increase in deep-buying did not reverse that momentum, more traders could dump those stocks. can do Haunted by the specter of late 2018 and the financial crisis of 2008, retail investors are in a delicate situation, Vanda analysts said. They noted that the capitulation for investors in 2018 came in the fourth quarter, “when equity markets began free fall after a prolonged range-bound period amid mixed Fed commentary.” The S&P 500 index fell more than 9% in December 2018 amid concerns about Fed tightening, an economic slowdown and US-China trade tensions. Markets are gearing up for next week’s Federal Reserve policy meeting. Fed funds futures traders now see a 75.3% chance of a 25 basis point rate hike next Wednesday due to inflation concerns. As banking stress remains in the background. Read: What it might take to calm banking sector concerns: Time and a Fed rate hike. “We also believe that the fear of ‘systemic risk’ related to the banking sector is more emotionally volatile for bearish investors than the Fed’s interest rate hike or any marginal selling from events outside the US,” Vanda analysts said. “We remain cautious as we may see increased volatility in flows in the coming weeks, especially if retail traders panic and start moving more of their assets into money-market funds.” Such funds are considered safe because investments are concentrated in low-risk areas such as cash and securities that behave like cash, such as CDs and Treasury bills. One stock they note isn’t getting any dip-buying love is Tesla TSLA, -2.17% , which continues to underperform the broader market since a disappointing investor day earlier this month, the Wanda team said. Shares of Tesla have fallen 13% this month, versus a 1.3% gain for the Nasdaq Composite COMP, -0.74% . “We believe that in this environment, TSLA may hold back as investors now have the opportunity to choose from other familiar pockets of the stock market that have recently soured, such as energy or financials,” they said. Read: Every hiking cycle over the past 70 years has ended in a recession or financial crisis. ‘It’s no different this time,’ says the Morgan Stanley strategist.
