U.S. equity fund inflows hit three-week high as chipmaker optimism drives record S&P 500
Net inflows of $22.37 billion mark the strongest weekly performance since late April, underpinned by robust earnings data and strong revenue guidance from semiconductor firms.
U.S. equity fund inflows surged to a three-week high in the week ending May 13, with investors directing a net $22.37 billion into funds. This represents the largest weekly net purchase since the week ending April 22, when inflows totalled $27.97 billion, according to data from LSEG Lipper. The surge occurred despite a noted buildup in inflationary pressure, suggesting that investor appetite for risk assets remains resilient.
The primary catalyst for the capital rotation was optimism surrounding a strong earnings season. Strong sales forecasts from chipmakers Advanced Micro Devices and Microchip Technology bolstered market sentiment, helping to push the S&P 500 to a record high of 7,517.12 on Thursday. Data from LSEG covering 455 S&P 500 constituents indicated that approximately 83% of companies beat analysts' average profit estimates for the first quarter.
Capital flows were heavily concentrated in large-cap equities, which recorded inflows of $17.06 billion, the largest weekly gain in six weeks. The technology sector also saw record weekly net investments of $8.51 billion. In contrast, mid-cap and small-cap funds experienced net outflows of $1.25 billion and $2.53 billion, respectively, while the financials sector faced an outflow of $1.37 billion.
In fixed income, bond fund inflows rose to a three-month high of $12.9 billion. U.S. short-to-intermediate investment-grade funds, general domestic taxable fixed income funds, and short-to-intermediate government and treasury funds drew net investments of $4.02 billion, $3.08 billion, and $2.14 billion, respectively. This shift coincided with investors divesting a net $4.4 billion from money market funds, following a substantial net purchase of $113.53 billion the previous week.
Market activity was further influenced by geopolitical developments, as U.S. stock markets rose on Thursday with the commencement of a two-day summit between President Donald Trump and Chinese President Xi Jinping in Beijing. The Dow Jones Industrial Average gained 0.8%, the S&P 500 rose 0.3%, and the Nasdaq Composite climbed 0.2%. Nvidia shares surged more than 2% following news that the U.S. approved H200 chip sales to Chinese firms.
