(Reuters) – U.S. stock funds attracted significant inflows in the week to Dec. 25, recovering from a selloff the previous week, boosted by a cooler inflation report, a temporary funding bill that averted a government shutdown and a so-called “Santa Claus” rally.
According to data from LSEG Lipper, US equity funds saw inflows for the seventh week in eight weeks, amounting to $20.56 billion on a net basis after a sharp $49.7 billion of net selling in the previous week.
A report from the Commerce Department last Friday revealed that the PCE price index rose just 0.1% in November, below analysts’ expectations, reviving hopes of further rate cuts by the Federal Reserve next year and boosting U.S. stocks, which also typically benefit from “increasing Santa Claus” in the final week of the year.
Investors, however, focused on U.S. large-cap funds, as they pumped a net $31.67 billion into those funds, the most since Oct. 2, following $20.94 billion in net selling the previous week.
Meanwhile, small-cap, mid-cap and multi-cap funds saw outflows of $2.95 billion, $1.17 billion and $853 million, respectively.
Sector equity funds also witnessed net outflows of $2.14 billion with healthcare and consumer discretionary, with $495 million and $476 million in net sales, leading the way.
U.S. bond funds saw a second straight week of outflows, with investors pulling a net $5.42 billion.
Among the segments, US emerging market debt funds, short-to-intermediate investment funds and municipal debt funds recorded net sales of $924 million, $899 million and $879 million, respectively.
In contrast, short-term government and treasury funds bucked the trend, attracting $957 million in inflows.
Meanwhile, US money market funds saw significant interest, drawing a net $41.72 billion, a sharp reversal from the previous week’s $27.31 billion in net selling.
