The strategist’s warning comes close to the top of a powerful yr for U.S. equities. They’re on monitor for document inflows in 2024, in response to BofA, with the S&P 500 rallying 23% after a acquire of an analogous dimension in 2023.
Optimism pushed by a resilient American financial system, synthetic intelligence developments and falling charges has lifted shares, however there are actually doubts about whether or not the rally can run additional after the Fed’s hawkish tone earlier this week.
Whereas bond funds noticed their first outflow in 52 weeks at $6 billion, buyers had been loading up on shares within the week by way of Wednesday.
World fairness funds drew the most important influx ever at virtually $69 billion, with US inventory funds additionally attracting document additions, at $82 billion, in response to EPFR World knowledge cited by BofA.
There have been “abnormally giant each day inflows throughout all S&P 500 funds this Wednesday, probably associated to approaching Dec. 23 quarterly rebalance,” Hartnett stated.
The rebalancing of benchmark indexes together with the S&P 500 coincides with Friday’s quarterly “triple-witching,” which is able to see an expiry of $6.5 trillion value of choices tied to particular person shares, indexes and exchange-traded funds.
Share volumes sometimes spike throughout the choices expiration, which has a repute for inflicting sudden value strikes as contracts disappear and merchants roll over their current positions or begin new ones.
