The Fed lowered the federal funds rate by 25 bps on September 17, the first rate cut since December 2024. However, investors may have viewed the action as a “sell the news” event.
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For the week ended September 17, U.S. equity fund net outflows were $43.19 billion, the highest weekly total since a $50.62 billion net outflow in mid-December 2024, according to LSEG Lipper data. That also coincides with when the Fed cut rates by 25 bps on December 18.
Investors Pull Billions from Stocks and Money Markets
Furthermore, U.S. large-cap funds experienced a net $34.19 billion weekly outflow, the largest since at least 2020.
“After such a strong recent run, a period of consolidation should not come as a surprise, in our view,” said UBS Global Wealth Management Chief Investment Officer Mark Haefele.
Meanwhile, anticipation of a rate cut may have led to an exodus of money market investments, as lower rates reduce yields. Investors sold a net of $23.65 billion of money market funds, ending a three-week streak of net buys.
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