Bank of America Clients Are Dumping Meta and Google Stocks at a Record Pace
Bank of America clients are fleeing communication services stocks at a pace not seen since the sector existed, and the fund most exposed to the fallout just broke below a critical price floor with another major earnings shock still unpriced.
The selling at Bank of America (NYSE:BAC | BAC Price Prediction) finally got a sector label. The bank’s weekly equity flows note, reported October 28, 2026, said clients sold U.S. stocks for a second straight week, “led by record outflows from communication services stocks after a sharp post-earnings sell-off in Meta Platforms.” For the week of October 19 through October 23, it was the sector’s largest outflow since it became a standalone sector in September 2018.
Meta Platforms (NASDAQ:META) led the move. The stock fell 6.98% to $648.85 on October 22, and it closed October 28 at $612.49, down 15.5% from $725.18 on September 30.
The damage shows up most clearly in the State Street Communication Services Select Sector SPDR ETF (NYSEARCA:XLC). It closed October 28 at $103.14, its sixth straight daily loss and 6.4% below its $110.19 close on October 20. After hours, it fell 1.85% to $101.23, below the $102.62 bottom of its 52-week range.
Who Sold, Who Bought, and What Bank of America Left Out
Bank of America reports flows by sector. The note never mentions Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL); it names Meta only as the trigger and does not disclose the dollar size of the communication services outflow.
Bank of America clients sold $3.5 billion of single stocks as the S&P 500 fell 0.5%. The week before, Bank of America had recorded single-stock outflows of about $15 billion.
Retail clients led the selling for a second week, and hedge funds also sold, but institutions bought. Industrials saw the next-largest outflows, their 13th straight week of selling at Bank of America.
Most of the money stayed in stocks. Seven of 11 sectors drew Bank of America client inflows, led by consumer discretionary, and clients bought $2.3 billion of equity ETFs, with tech funds leading.
XLC Owners Hold a Two-Stock Fund
Meta makes up 21.45% of XLC. Alphabet adds 12.27% through its Class A shares and 9.82% through Class C, so the two companies account for about 43.5% of the fund.
That leaves XLC exposed to a second hit. Alphabet’s Class A shares fell 9.97% after hours on October 28 to $292.50, down from a $324.89 close, after the company’s third-quarter report. That drop came after the flows week ended, so it played no part in the selling Bank of America recorded.
Meta’s trouble is spending. Third-quarter capital expenditures reached $34.9 billion, free cash flow came in at negative $2.12 billion, and a $9.89 billion legal charge weighed on earnings. On the October 21 call, chief executive Mark Zuckerberg said Meta’s new AI agent, “Muse, is very compute-intensive to run.”
XLC Trails Every Other Sector Fund in 2026
XLC’s 2026 total return through October 28 is -11.6%. That is 8.8 points behind the next-worst sector fund, the Consumer Discretionary Select Sector SPDR (NYSEARCA:XLY), at -2.8%.
Valuation offers some context. Meta trades at about 22x earnings with a 41.44% operating margin, a multiple that is alongside heavy spending and negative free cash flow.
Two Price Levels Could Decide XLC’s Next Move
XLC’s after-hours break below its 52-week low coincided with Alphabet’s drop, and with nearly half the fund in two stocks, the ETF offers limited sector diversification.
The flows add context. Institutions bought while retail clients and hedge funds sold, a split worth tracking in the next weekly note.
Meta trades on its own fundamentals. At a $1.356 trillion market value and 22x earnings, its risks are easier to identify than XLC’s, which also includes Alphabet’s fresh post-earnings drop.
Investors should keep an eye on two levels because if XLC cannot close back above $102.62, and Bank of America’s note for October 26 through October 30 shows another communication services outflow, pressure on the fund likely continues, while a close back above $110.19 would signal that the selling has run its course.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
