(Reuters) - U.S. investors were net sellers of equity funds for a fifth successive week in the seven days to May 1, exercising caution ahead of the Federal Reserve's policy decision and scaling back expectations for interest rate cuts that were prevalent at the start of the year.
According to LSEG data, investors shed a net $5.48 billion worth of U.S. equity funds, extending the weekly selling trend into a fifth consecutive week.
Fed Chair Jerome Powell kept rates steady on Wednesday, signaling future rate cuts but cautioning they might be delayed due to persistent inflation in the first quarter.
However, U.S. large-cap equity funds were in demand, recording approximately $1.2 billion in net purchases during the week — marking the second consecutive weekly inflow, buoyed by strong earnings from Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT).
Meanwhile, U.S. small-cap, mid-cap, and multi-cap funds experienced net outflows of $2.14 billion, $1.08 billion, and $637 million, respectively.
By sector, investors withdrew $790 million, $684 million, and $295 million from the healthcare, consumer discretionary, and industrial sectors, respectively.
U.S. bond funds attracted approximately $674 million in net purchases, marking the second consecutive week of inflows.
U.S. mortgage funds received a substantial $1.35 billion, marking the largest weekly inflow since January 2023. Loan participation and municipal debt funds also recorded net purchases of $665 million and $515 million, respectively, during the week.
Meanwhile, investors withdrew approximately $2.66 billion from U.S. short/intermediate government and treasury funds, ending a four-week buying streak.
Money market funds secured $26.53 billion in a second successive week of net buying.