US Equity Funds Cautiously See Outflows Ahead of Earnings Reports

(Reuters) – U.S. equity funds posted weekly outflows for the first time in three weeks in the seven days to July 10, as caution and profit-taking took hold ahead of the new earnings season.

Investors sold a net $3.57 billion of U.S. equity funds during the week, partially reversing a net $8.56 billion of purchases from the previous week, according to LSEG data.

U.S. stocks set new records this week, driven largely by a weaker jobs report on Friday and weaker consumer price inflation data on Thursday, which fueled expectations that the Federal Reserve will cut interest rates.

The S&P 500 and Nasdaq Composite indexes hit new highs on Thursday but later faced selling pressure in some important sectors.

Investors on Friday reviewed second-quarter results from the largest U.S. banks, following disappointing results from market leaders PepsiCo Inc. and Delta Air Lines, which disappointed markets on Thursday.

Among segments, investors withdrew $3.24 billion from large-cap funds, ending a two-week buying streak, and also withdrew from multi-, mid- and small-cap funds, netting a combined $873 million, $664 million and $87 million, respectively.

However, US sector equity funds saw inflows of $443 million, supported by a significant investment of $615 million in technology funds, the biggest weekly gain since June 12.

Meanwhile, U.S. bond funds continued to attract capital, recording a sixth straight week of capital inflows totaling $3.77 billion.

Investors preferred US government and treasury bond funds, short-term/intermediate-term government and treasury funds, and domestic municipal debt funds, which received inflows of USD 1.52 billion, USD 861 million and USD 810 million, respectively.

Additionally, money market funds received $3.98 billion, marking the second consecutive week of inflows.

(Reporting by Gaurav Dogra and Patturaji Murugaboopathy in Bengaluru; Editing by Tasim Zahid)