Investors pumped $45 billion into stocks last month, the biggest inflow in over a year as recession fears melt away

• Investors poured $45 billion into the stock market in June, Bank of America said.
• That's as inflation fades and recession fears appear to be on the decline, spurring more bullishness. 
• Inflation cooled to 3% in June, which helped drive $12 billion into stocks in a single week this month. 

Investors in June pumped more money into stocks than they have in a single month since March 2022, as fears of a recession fade. 

Inflows into stocks rose to $45 billion through the month of June, according to Bank of America. The massive allocation to equities is contrary to patterns seen over the past six months, where investors shifted away from the stock market and into bonds as they fretted over a potential downturn.

"While yields are still attractive, recession fears are easing," Bank of America strategists said. "The 9% increase in the S&P 500 since April month-end likely attracted the $45bn June inflow into equity funds / ETFs."

Markets have been bracing for a recession for most of the past year amid the Fed's battle to rein in high inflation by raising interest rates.

But inflation has cooled closer to the Fed's long-run 2% price target, something that could make a soft-landing more likely for the economy. Prices were up 3% last month. That helped fuel a $12 billion inflow in a single week earlier this month following the publication of the June inflation report. 

Meanwhile, investors are expecting the Fed to soon pause or dial back rate hikes as inflation looks be on the steady decline. Markets are pricing a 25 basis-point rate hike in July, with an 86% chance the Fed will then pause interest rates in September, according to the CME FedWatch tool.