(Reuters) - U.S. equity funds faced their first weekly outflow in three weeks in the seven days to July 10 as caution and profit-taking took hold ahead of the new earnings season.
According to LSEG data, investors sold a net $3.57 billion worth of U.S. equity funds during the week, partly reversing a net $8.56 billion worth of purchases the previous week.
U.S. stocks set new records this week, driven by a softer jobs report last Friday and weaker consumer price inflation data on Thursday, which fueled expectations of a Federal Reserve rate cut.
The S&P 500 and Nasdaq Composite reached new highs on Thursday but later faced selling pressure in some heavyweight sectors.
Investors digested second-quarter earnings from major U.S. banks on Friday, following disappointing results from bellwethers PepsiCo (NASDAQ:PEP) Inc and Delta Air Lines (NYSE:DAL) that left markets underwhelmed on Thursday.
Among segments, investors withdrew $3.24 billion from large-cap funds, ending a two-week buying streak, and also exited multi-cap, mid-cap, and small-cap funds, totaling $873 million, $664 million, and $87 million, respectively.
However, U.S. sectoral equity funds saw $443 million in inflows, buoyed by a significant $615 million investment in technology funds, the largest weekly gain since June 12.
Meanwhile, U.S. bond funds continued to attract capital, with a sixth consecutive week of inflows totaling $3.77 billion.
Investors heavily favored U.S. government & treasury fixed income, short/intermediate government & treasury, and national municipal debt funds, with inflows of $1.52 billion, $861 million, and $810 million, respectively.
Additionally, money market funds received $3.98 billion, marking the second consecutive week of inflows.