Investors bracing for a jolt from the recession accelerated their pullback from stocks after the Federal Reserve warned it would not be easily deterred in its fight against inflation, according to strategists at Bank of America Corp.

Global equity funds saw outflows of $9.4 billion in the week to August 31, the fourth-largest redemptions this year, according to EPFR Global data cited by the bank. U.S. stocks saw the biggest exodus in 10 weeks as $4.2 billion left global bond funds, the data showed.

Strategists led by Michael Hartnett expect a “fast inflation shock, slow recession shock” as nominal growth continues to be boosted by soaring consumer prices, fiscal stimulus, significant household savings and the impact of the war in Ukraine.

US stocks took a hit after Fed Chairman Jerome Powell said the central bank would not slow the pace of rate hikes until inflation cooled more significantly. The S&P 500 has wiped out $2 trillion in market capitalization in the past five days and has given up nearly half of its gains made during the summer rally.

Hartnett expects “new highs for yields, new lows for equities,” adding that he would “nibble” the S&P 500 between 3,600 and 3,700 points – up to 9% below current levels.

Morgan Stanley’s Michael J. Wilson – one of Wall Street’s most famous bears – also said this week that he expects the S&P 500 to hit 3,400 points in the event of a soft landing and 3 000 in the event of a “true recession”. Famed investor Jeremy Grantham, meanwhile, said the “super bubble” he warned of had yet to burst.

Still, investors appear to be becoming less pessimistic about the outlook for US equities.

U.S. stock futures jumped on Friday morning after data showed unemployment in the country rose in August. S&P 500 futures rose 0.6%, while Nasdaq futures climbed 0.7%.

At the same time, Bank of America‘s custom bullish and bearish indicator moved from zero to less bearish for the first time since June. The bank’s so-called sell-side gauge also rose in August for the first time since October 2021, strategists led by Savita Subramanian wrote in a note Thursday. The gauge gauges Wall Street’s sentiment toward US equities on a monthly basis, based on asset allocation recommendations provided to the bank and Bloomberg.

In Europe, however, there was no respite from the exodus, with equity funds seeing outflows for a 29th consecutive week. In terms of stock flow by style factors, US value saw inflows, while small caps, growth and large caps saw redemptions. By sectors, technology led the additions, while consumption saw the largest outflows.