Fund flows show investors’ reticence on U.S. stocks

NEW YORK (Reuters) – Investors flooded U.S.-based taxable-bond funds with $7.9 billion during the latest week, Investment Company Institute (ICI) data showed on Wednesday, a 36th straight week of inflows that shows investors further stepping back from domestic stocks.

The push into bond mutual fund and exchange-traded funds comes even with the S&P 500 on pace to deliver double-digit percent returns for seventh year in the last decade.

Matt Schreiber, president at WBI Investments Inc, said wage growth has been soft, state-level economic data weak and momentum for U.S. President Donald Trump’s economic agenda slow. All that may point to a weaker stock market going forward.

“We are concerned about the market being at all-time highs,” he said.

“We could be flirting with recession.”

Investors pulled $2.8 billion from domestic stock funds during the week ended Aug. 9, marking seven weeks of withdrawals in the last eight weeks, ICI data showed. World stock funds attracted $4.5 billion, the 36th consecutive week of inflows.

Municipal bond funds, which invest in tax-exempt bonds, pulled in $1.1 billion, pushing overall bond inflows for the week to $8.9 billion, according to the trade group.

The reporting period closed a day before a sell-off hit U.S. stocks following an exchange of threats between the United States and North Korea.

Reporting by Trevor Hunnicutt; Editing by Tom Brown

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