U.S. equity funds draw inflows as rate-hike concerns ease

U.S. equity funds attracted inflows in the week through August 12, as a softer-than-expected payrolls report and benign inflation data tempered expectations of a Federal Reserve rate hike, boosting appetite for risk assets.

Investors purchased a net $2.58 billion in U.S. equity funds during the week, more than offsetting the previous week's net outflow of $1.36 billion, according to LSEG Lipper data.

The S&P 500 .SPX hit a record 7,816.70 on Thursday after Labor Department data showed U.S. producer prices were unchanged in July, reinforcing expectations that the Fed would keep rates unchanged next month.

The index has gained about 4.13% this month, broadly supported by a strong earnings season. About 85% of the 456 S&P 500 companies with available LSEG data reported quarterly earnings above analysts' expectations.

U.S. equity growth funds attracted $8.78 billion, their largest weekly net inflow since November 2024, while value funds recorded net purchases of $1.79 billion.

Investors withdrew a net $3.78 billion from sectoral funds, led by $4.62 billion in outflows from technology funds after six straight weeks of net purchases. Financial funds also experienced net withdrawals of $633 million.

Bond funds attracted net inflows of $9.4 billion during the week, the highest in four weeks.

Investors allocated $2.98 billion to short-to-intermediate investment-grade funds, $2.07 billion to general domestic taxable fixed-income funds, and $1.92 billion to short-to-intermediate government and Treasury funds.

Money market funds recorded a second consecutive weekly inflow of $13.92 billion.