Wall Street closed with gains, but there’s an alarm in the market

Wall Street closed with gains this Wednesday, and its main indicator, the Dow Jones of Industrials, rose 0.93% after two consecutive days of decline. The Dow added 316.01 points to 34,137.31 units.

The S&P 500 also climbed by 0.93% or 38.48 points, up to 4,173.42 units.

The Nasdaq composite index, which combines the most important technology companies in the market, advanced a solid 1.19% or 163.95 points to 13,950.22 units.

The New York stock market seemed to bet on values ​​that may benefit from the economic recovery. It led to the rise of the Russell 2000 index, which groups small and medium-sized companies, by 2.26%.

Wall Street sees turbulence amid stock market euphoria

Wall Street giants such as Goldman Sachs, Bank of America, or Morgan Stanley, have sounded the alarm. Their respective analysts warn that the American market is facing a period of severe turbulence when it is experiencing a significant change in the stock market.

In fact, according to the latest data released by Bank of America, the bank’s institutional clients sold about $5.2 billion in US equities last week. It’s the most significant capital outflow since mid-November and the fifth-largest ever registered. Paradoxically, this movement coincided with the new highs reached by the S&P 500.

Jill Carey Hall, a BofA strategist, pointed out that the four-week flow average has trended lower in recent weeks. It has now turned negative for the first time since mid-February, suggesting a pause in increasingly euphoric sentiment.

According to Hall, retail clients were the only buyers last week. Meanwhile, institutional and hedge fund clients loosed positions. According to data provided by the bank, retail investors have been buyers for the eighth week in a row. At the same time, hedge fund clients have sold for the third week in a row.

Furthermore, David Kostin, chief strategist at Goldman Sachs, hinted in one of his latest reports that even retail enthusiasm is fading, perhaps fueled by the calm in equity markets.