US equity funds draw big inflows on bank earnings, rate cut hopes

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

According to LSEG data, U.S. equity funds drew a sharp $20.08 billion in net purchases during the week, following about $3.98 billion worth of inflows in the previous week.

Strong earnings reports from mega-cap banks including Morgan Stanley, JP Morgan Chase (NYSE:JPM) and Goldman Sachs boosted investor sentiment, driving Wall Street’s major indexes to records this week.

The financial sector gained a substantial $1.17 billion worth of inflows, the highest in three months. Technology and industrial sector funds saw a net $473 million and $378 million worth of purchases.

By segment, investors racked up a net $15.25 billion of large-cap funds, a sharp rebound from $4.25 billion in net sales during the previous week. Mid-cap, multi-cap, and small-cap funds witnessed $1.49 billion, $617 million and $473 million worth of inflows.

U.S. bond funds received $9.78 billion, the biggest weekly inflow in three months.

Investors scooped up U.S. general domestic taxable, short-to-intermediate investment-grade, and municipal debt funds worth a remarkable $2.12 billion, $2.04 billion and $1.72 billion, respectively.

Money market funds suffered $11.79 billion worth of net sales, the first weekly outflow in four weeks.