U.S. equity funds saw sizeable outflows in the seven days through January 7, as investors turned cautious over deepening global tensions and ahead of the U.S. jobs report, seen as one of the factors influencing the Federal Reserve’s rate outlook.
Investors also awaited a Supreme Court ruling on the legality of President Donald Trump's sweeping tariffs that jolted markets last year.
According to LSEG Lipper data, investors withdrew a net $26 billion from U.S. equity funds during the week in their first weekly net sales since December 17.
U.S. large-cap funds were under pressure as investors withdrew $31.75 billion from these funds, the biggest amount for a week since September 17. Small-cap and mid-cap funds also saw $3.43 billion and $1.31 billion worth of net outflows.
Investors, however, poured $5.32 billion into sectoral funds.
They bought industrial, tech and financial sector funds of $1.69 billion, $1.32 billion and $1.3 billion, respectively.
U.S. job growth slowed more than expected in December amid business caution about hiring because of import tariffs and rising artificial intelligence investment, but the unemployment rate dipped to 4.4%, supporting expectations the Federal Reserve would leave interest rates unchanged this month.
Money market funds, meanwhile, attracted $53.35 billion in a second successive week of net purchases.
U.S. bond funds also saw a renewed demand as investors pumped $9.27 billion into these funds after a net $2 billion worth of weekly withdrawals.
Demand for short-to-intermediate investment-grade funds surged to a six-month high as these funds drew $4.12 billion.
General domestic taxable fixed income funds and short-to-intermediate government and treasury funds also saw significant inflows of $1.58 billion and $1.51 billion, respectively.
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