U.S. stock funds attracted $19.7 billion in a single week, reaching a new high in over two months as investors bet on economic resilience and interest rate cut expectations
As of the week ending February 26, U.S. stock funds had a net inflow of $19.71 billion, reaching a two-month high, reflecting investors' confidence in economic resilience and expectations of interest rate cuts by the Federal Reserve. Despite increased market volatility, the technology, healthcare, and communication services sectors attracted significant capital, while the financial sector faced large-scale withdrawals. Meanwhile, demand for bond funds remained strong, with a net inflow of $7.42 billion
According to the Zhitong Finance APP, as of the week ending February 26, investors' confidence in the resilience of the U.S. economy and expectations that the Federal Reserve may cut interest rates by the end of the year to stimulate economic growth have led to increased investments in U.S. stock funds. According to LSEG Lipper data, investors net purchased U.S. stock funds worth $19.71 billion this week, marking the largest single-week net purchase since December 25, 2024, despite concerns over tariffs.
Figure 1
Mark Haefele, Chief Investment Officer of UBS Global Wealth Management, stated, "The U.S. economy remains in good shape, and we believe the announced tariffs are unlikely to have a significant negative impact on growth. However, we expect market volatility to persist, and recent trends in the bond market once again demonstrate that high-quality fixed income remains an important component of a resilient portfolio, helping investors navigate future uncertainties."
Among various stock funds, U.S. large-cap funds saw a net purchase of $20 billion, the highest in two months, with diversified equity funds netting $137 million. However, small-cap and mid-cap funds experienced outflows of $545 million and $197 million, respectively.
In terms of sector funds, technology, healthcare, and communication services attracted $1.05 billion, $869 million, and $518 million, respectively, while financial sector funds faced a massive withdrawal of $1.2 billion.
Figure 2
Meanwhile, the S&P 500 Index and the Nasdaq Composite Index fell sharply by 2.5% and 5% this week, primarily influenced by the decline in Nvidia (NVDA.US) stock prices, as the company's quarterly performance did not meet investor expectations.
Additionally, investors poured $49.47 billion into money market funds, marking the largest single-week net purchase since January 8. U.S. bond funds saw strong demand for the eighth consecutive week, with a total net inflow of $7.42 billion for the week.
In the segmented market, U.S. short- to intermediate-term investment-grade funds, short- to intermediate-term government and treasury funds, and general domestic taxable fixed income funds led the way, with net inflows of $1.82 billion, $1.56 billion, and $1.37 billion, respectively.
Figure 3