Clients Flee Comms Stocks: Sector Sees Record Outflows

Bank of America clients have exhibited record outflows from communication services stocks, a trend not observed since the sector's establishment in September 2018. This significant selling pressure was primarily instigated by a substantial earnings shock and subsequent price drop in Meta Platforms. The Communication Services Select Sector SPDR ETF (XLC) has consequently fallen below a critical price floor, indicating widespread investor apprehension.

During the week of October 19-23, 2026, the outflows from this sector were the largest recorded. Meta Platforms' stock experienced a notable decline, impacting the XLC ETF, which tracks major communication services companies. The fund's exposure is heavily concentrated, with Meta and Alphabet comprising approximately 43.5% of its holdings, leaving it vulnerable to further shocks.

Alphabet's own post-earnings report on October 28, 2026, caused its shares to drop significantly in after-hours trading, a decline that occurred after the main Bank of America flows reporting period. This dual impact on its two largest holdings places further pressure on the XLC ETF, which has already underperformed other sector funds throughout 2026.

Investors are now closely watching two key price levels for the XLC ETF: $102.62, its previous 52-week low, and $110.19, a previous resistance level. A failure to close above the former, coupled with continued outflows, suggests ongoing downward pressure. Conversely, a sustained close above $110.19 might signal an end to the selling.