Key Points
Now that BlackRock’s first quarter 2024 results are out, investors can get an inside look at what its clients are looking to do in today’s market.
A prevalent preference for stocks over bonds is clear, with passive (ETF) buying being the choice rather than active trading. 
Signs of certainty ahead drove clients to these rotations, so investors need not fear the postponed interest rate cuts.
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Whatever clients at Wall Street’s most prominent investment houses are doing, retail investors can get a glimpse and attempt to follow behind them as long as the reasoning makes sense. This week, investors get an inside look into BlackRock Inc. NYSE: BLK and what this firm is advising its clients to do.
As the stock rallies to flirt with its all-time high price, set in late 2021, inflow and outflow activity inside the $117 billion behemoth could give Main Street the answer it has been looking for. One key trend to keep in mind is the potential interest rate cuts proposed by the Federal Reserve (the Fed) and how this possibility affects investors today.
Inside BlackRock, clients keep betting on increasing equities and see no reason to rotate into fixed-income assets (bonds). This behavior is typical of low-interest rate environments, as bond yields fall along with the Fed rates and subsequently help stocks of all sectors push higher.
It is All About Certainty
The Fed started the year by saying it would cut rates by March 2024, but U.S. inflation data proved stickier than expected when March came. The Fed’s mandate focuses on two main economic factors: inflation and unemployment.
So long as the labor market stays hot, considered below 4% for national unemployment, the Fed won’t have much incentive to start cutting interest rates. When investors notice unemployment figures reach the 4% to 5% mark, they could reasonably expect some action regarding interest rates.
On the inflation front, March data showed a 3.5% inflation rate, scaring markets after February’s 3.2% reading. Official Fed readings still show a higher inflation rate than their set 2% target, so rate cuts (on employment and inflation terms) are far out of sight for markets today.
Traders lost hope in any chance of a rate cut in May or June 2024, as the FedWatch tool at CME Group Inc. now shows traders pricing in these cuts for September 2024 instead. Why do BlackRock’s clients keep betting on stocks, not bonds, amid all this uncertainty?
Insider’s Table Behavior
Institutions like BlackRock typically know what is really happening, far from having a negative or illicit connotation. BlackRock’s access to global data and thousands of analysts working every day to derive insights simply give it the competitive advantage its clients need to see far enough into the future.
For this reason, equity clients gave BlackRock the most significant inflow for the first quarter of 2024; the retail equity segment saw a net $4.9 billion inflow of assets. At the same time, retail fixed-income clients took out a net $25 million from this portfolio.
Institutionally, exchange-traded funds (ETFs) followed a similar path, as equity ETFs reported a net inflow of $128 billion, while fixed-income ETFs were only $96.6 billion.

This is why equity and fixed-income active management segments saw a respective outflow of $6.3 billion and $5.6 billion.
Goldman Sachs: A Sounding Board
With The Goldman Sachs Group Inc. NYSE: GS set to report its quarterly earnings this week, whatever its clients are advised to do could also build upon BlackRock’s trend.
As the investment bank looks to make a new all-time high price, markets are more specific about this interest rate cut thesis. Low interest rates spark investment banking activity, as cheap financing stimulates mergers and acquisitions (M&A) deals that bring in the bulk of the banks’ fees.
Over the past nine months, the Financial Select Sector SPDR Fund NYSEARCA: XLF outperformed the broader S&P 500 by roughly 5%. Typically, financial stocks are the first to react to interest rate pivots, as these rates drive interest income and other fee-based businesses.
This price action suggests that all is well with the rate cut narrative, even if it is being postponed.
Retail investors have one thing to take away: Goldman’s price action and BlackRock’s asset rotations are linked. Certainty remains high for these Wall Street giants, and clients see more certainty (and potentially upside) in equities rather than fixed income, meaning ‘higher for longer’ rates may not be a reality after all.Before you consider Financial Select Sector SPDR Fund, you’ll want to hear this.MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Financial Select Sector SPDR Fund wasn’t on the list.While Financial Select Sector SPDR Fund currently has a “hold” rating among analysts, top-rated analysts believe these five stocks are better buys.Which stocks are likely to thrive in today’s challenging market? Click the link below and we’ll send you MarketBeat’s list of ten stocks that will drive in any economic environment.Get This Free Report