Equity Funds See Massive Outflows Ahead of Jobs Report

US equity funds saw significant outflows last week as investors took profits ahead of the July jobs report, which is crucial for determining Federal Reserve rate expectations. The data, released by LSEG Lipper, showed that net divestments from US equity funds reached a staggering $1.58 billion during the period from August 5. This marks a sharp reversal from the previous week's $11.77 billion in net investments.

The S&P 500 index rebounded about 6.5% from its low of 7,313.92 to reach a record high of 7,793.68 on Wednesday, driven by strong performances from companies like Amazon, Caterpillar, and Palantir Technologies. Despite the market's rally, investors are holding back, awaiting the July employment report for clues about interest-rate outlook.

Economists expect payrolls to have risen by 80,000 in July after a 57,000 gain in June, while unemployment is forecast to hold at 4.2%. US equity growth funds recorded net outflows of $5.5 billion during the week, more than offsetting the $3.1 billion in inflows seen the previous week.

In contrast, value funds attracted significant net purchases worth $1.99 billion. Sector funds experienced a three-week low in weekly investment, with net purchases of technology funds falling to a six-week low of $388 million. However, industrials, healthcare, and consumer discretionary funds drew notable net inflows of $875 million, $866 million, and $708 million, respectively.

Bond funds also saw increased interest, attracting net weekly inflows of $6.52 billion. Short-to-intermediate investment-grade funds, short-to-intermediate government and Treasury funds, and municipal debt funds led bond fund inflows, drawing net purchases of $2.05 billion, $1.3 billion, and $1.15 billion, respectively.