July 17, 2019 / 4:52 PM / a month ago

Investors wade back into U.S. stocks as S&P 500 hits records

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., July 12, 2019. REUTERS/Lucas Jackson

NEW YORK (Reuters) - Investors waded back into the U.S. stock market by buying mutual funds and exchange-traded funds that hold domestic stocks last week after pulling out the largest amount of net assets since 2014 the week before, according to data released on Wednesday by the Investment Company Institute. 

Overall, investors sent nearly $2.4 billion into domestic stock funds last week, breaking a two-week retreat that pulled more than $30 billion in net assets from the category. The moves into the market came as the benchmark S&P 500 continued to touch new highs as part of a rally that has pushed the index up nearly 20% for the year to date, fueled in part by expectations of at least one equity-friendly interest rate cut by the U.S. Federal Reserve by the end of the year. 

Yet despite that rally, investors have been hesitant to buy U.S. stock funds. For the year to date, investors have pulled nearly $59 billion from U.S. stock funds, according to ICI data. 

Instead, investors continue to gravitate toward bonds even as the yield of the 10-year Treasury hovers near 2%. Taxable and municipal debt funds added another $9.9 billion in new assets last week, continuing a streak of positive inflows over every full week of this year that has brought in nearly $234 billion in net assets into the category over that time. 

World stocks, meanwhile, continued to seep assets. Investors pulled slightly more than $1 billion from the category last week, adding to a seven-week losing streak. For the year to date, world stock funds have dropped nearly $17.7 billion in net assets. 

Reporting by David Randall; Editing by Jennifer Ablan and Jonathan Oatis

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