The buy-the-dippers are out in force ahead of Federal Reserve chairman Jerome Powell’s 2:30 p.m. ET press conference. Investors are anxious for any detail on the central bank’s plan to wrap up its bond-buying program (what’s known as “tapering”) and resume, down the road, the process of raising interest rates—i.e., “tightening.” A host of Wall Street banks, including Goldman Sachs and Deutsche Bank, are factoring in four rate-hikes this year, with the first to come at the next Federal Open Market Committee (FOMC) meeting in March.

“With Fed policy so acutely driving risk assets in recent weeks, it sets up an interesting day of communications ahead for the FOMC,” Jim Reid, Deutsche Bank research strategist, wrote in a note to clients on Wednesday.

Typically, markets flatline ahead of such consequential Fed meetings as investors hang on the sidelines until news breaks on Fed policy matters. But there’s nothing typical about the markets in 2022. The benchmark S&P 500 is down more than 9% so far this year, teetering on the brink of “correction” territory, as investors weigh a host of headwinds to risk-assets: from higher borrowing rates, to rising inflation and slowing growth. The Nasdaq is already well into a correction, trading nearly 15% lower, year to date. The tech-heavy index is on track for its worst January performance ever. High-growth tech stocks with weak earnings and poor cash flow tend to underperform the markets when interest rates begin to climb.

But so far today, investors are seeing plenty of reason to buy beaten-down stocks.

The benchmark Stoxx Europe 600 took off out of the gates, up more than 1.5% an hour into the trading day. In Asia, the Shanghai Composite, in the final hour of trading, was up nearly 0.7%. And U.S. futures, led by tech stocks, were gaining. Nasdaq futures were up nearly 2%, helped by bellwether Microsoft (up 3.6% in premarket) reporting a solid beat after-hours on Tuesday, and delivering a somewhat rosy forecast for the year ahead.

A closer look at last week’s carnage

As gut-churning as this week has been, last week was even worse. The S&P 500 fell 5.7%, its worst one-week performance since March 2020, going all the way back to the early days of the pandemic.

In a research note, BofA Securities revealed what may have triggered the selloff: investors souring on exchange-traded funds, or ETFs. The boom in ETFs—funds that lump in whole categories of risk-assets—in recent years has been a huge lift to the equities markets. They’re seen as passive trades where investors can buy a basket of promising stocks as opposed to putting money behind one or two potential breakout candidates.

For the first time since September, BofA clients were net sellers of ETFs, and instead put their money into single stocks.

Even though the numbers are slight, BofA’s Jill Carey Hall and Savita Subramanian see the move as a further sign of investors recalibrating strategy. Out are “passive” trades like ETFs. In are “actively managed” trades like buying and selling individual stocks as the field of presumed winners dwindles ahead with uncertainty on the horizon.

What kind of ETFs were investors selling?

“Equity ETF outflows last week were broad-based across all sizes (small/mid/large/broad market) and styles (growth/value/blend),” Hall and Subramanian wrote.

In other words, they were selling just about everything.