U.S. Investors Surge into Equity Funds

(Reuters) – U.S. investors made significant investments in equity funds during the week ending October 16, buoyed by strong third-quarter earnings from U.S. lenders and optimism over a potential Federal Reserve rate cut in November, alongside signs of cooling inflation.

According to LSEG data, U.S. equity funds garnered a noteworthy $20.08 billion in net purchases during this period, following approximately $3.98 billion in inflows the previous week.

Strong earnings reports from major banks such as Morgan Stanley, JP Morgan Chase, and Goldman Sachs enhanced investor sentiment, propelling Wall Street's major indexes to record highs this week.

The financial sector experienced substantial inflows of $1.17 billion, marking the highest influx in three months. Additionally, technology and industrial sector funds attracted net purchases of $473 million and $378 million, respectively.

By segment, investors accumulated a net of $15.25 billion in large-cap funds, a significant recovery from $4.25 billion in net sales the previous week. Meanwhile, mid-cap, multi-cap, and small-cap funds saw inflows of $1.49 billion, $617 million, and $473 million.

U.S. bond funds also had a strong week, with $9.78 billion in the largest weekly inflow in three months.

Investors particularly favored U.S. general domestic taxable, short-to-intermediate investment-grade, and municipal debt funds, with purchases worth $2.12 billion, $2.04 billion, and $1.72 billion respectively.

Conversely, money market funds faced $11.79 billion in net sales, representing the first weekly outflow in four weeks.