US Stock Market’s Record Run Under Threat As Flows Into Equity Funds Weaken, Say RBC Analysts: Report

Analysts at global investment bank RBC Capital Markets are reportedly issuing a warning about the US stock market’s record run.

According to a new report by Bloomberg, RBC Capital Markets says that the flow of investment into equities is slowing down, raising concerns over whether stocks can sustain their massive rally.

The bank’s analysts say in a note to clients that the level of investment into US equity funds is lower than earlier in the year, although still positive.

They also say that flows from American and European investors into US- and non-US domiciled equity funds are softening while global flows, excluding the US, are trending down.

Says Lori Calvasina, head of US Equity Strategy Research at RBC Capital Markets,

“When we zoom out, we think this is evidence of buyers’ fatigue…

Importantly, within US equity funds retail flows have faltered recently.”

Calvasina also says elevated equity valuations, a decline in bullish sentiment and seasonal weakness and the S&P 500 historically having the worst returns of the year in September when compared to other months are further concerns for a potential market cooling.

Additionally, RBC data shows passive flow from retail investors into US equity funds is turning negative.

The S&P 500 index closed Wednesday at 6,532 points, up from about 5,000 points in early April.

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