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Large Withdrawals From US Equity Funds Ahead Of The Inflation Report Due To Profit-Taking

Social Security Benefits
Social Security Benefits; Source- Forbes

The week of December 20 witnessed substantial withdrawals from U.S. equities funds as investors booked profits ahead of a crucial report on U.S. inflation and as hope for possible rate cuts waned.

U.S Personal Consumption

Following a strong Wall Street surge, investors reevaluated their holdings and withdrew a net $10.45 billion from U.S. stock funds during the week, marking the greatest weekly net selling since September 27.

The S&P 500 (.SPX) fell 1.47% on Wednesday as it encountered resistance close to its record high of 4,818.62 set on January 4, 2022. Even with the recent drop, the index has still increased by almost 15.7% since it peaked on October 27 at a five-month low of 4,103.78.

The November U.S. personal consumption statistics (USPCEM=ECI) is due at 1330 GMT. It might influence predictions about the rate of decline in interest rates in 2024.

US Equities Value

Worth roughly $5.88 billion, U.S. equities value funds experienced their first weekly withdrawal in four weeks. On a net basis, investors also sold growth funds for about $11.31 billion.

Inflation

Source- Forbes

The IT sector saw net selling of $1.08 billion across sector funds, marking the second weekly outflow in the previous seven weeks. Approximately $200 million was lost in outflows from both gold and precious metal ETFs and financials.

In contrast, inflows into the industrial sector totaled $336 million, the highest level in nine weeks. Additionally, bond funds valued at $7.55 billion were liquidated by American investors, continuing withdrawals for a fourth week in a row.

The net selling of US short- and intermediate-term government and Treasury funds was over $5.1 billion, marking the ninth consecutive week of outflows. Additionally, a net $4.91 billion was removed from general domestic taxable fixed income funds by investors, while $1.42 billion was deposited into investment-grade short- and intermediate-term funds. Meanwhile, net selling of $25.54 billion hit U.S. money market funds, the worst weekly outflow since October 18.

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