Stock ETFs see faster inflows despite Wall Street bear-market warnings

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Stock ETFs are seeing accelerated inflows even as grimmer Wall Street predictions warn of a bear market ahead

, saying investors were shifting to bonds more than stocks on a relative basis by the most since the financial crisis of 2009.

Still, US stocks have gained so far in 2023, with the S&P 500 index advancing more than 7%. The benchmark gauge has rebounded by more than 18% from a two-year low reached in October. The market has maintained its buoyancy this month as investor concerns surrounding the recent banking turmoil seemingly receded.

"We haven't had a new low since October, people aren't hearing artillery shells landing anymore, so they're peeking heads out of foxholes," said George Pearkes, global macro strategist for Bespoke Investment Group,"It may seem silly to attribute large flows of capital to something as simple as not seeing a drop in some time. But that's how we see flows and sentiment operating in practice, even if it is simple and reductive," he said.

Wall Street veteran Ed Yardeni wrote:"In late October, we concluded that sentiment was so bearish it had to be bullish." But now,"sentiment may not be bullish enough to work as a contrary indicator for the bears, nor bearish enough to work for the bulls," he said per"A stalemate in their tug-of-war may be the result until the recession and debt-ceiling debates are resolved, probably in early June.

 

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