Investor appetite for U.S. equities cooled sharply last week, with inflows slipping to $1.15B — the weakest since mid-October — as markets reassess the durability of the AI-led rally and signs of softer U.S. labour conditions.
📉 Tech Momentum Loses Steam
- The Nasdaq Composite has fallen 4.8% since its Oct. 29 record high.
- Tech equity funds saw $1.74B, the lowest inflow in three weeks.
- Concerns rise over whether elevated AI-driven valuations can hold.
Yet, UBS CIO Mark Haefele notes valuations are still well below dot-com bubble levels:
➡️ Today’s top tech names: 30x forward earnings
➡️ 1999 bubble era: 70x+
🏦 Equity Fund Breakdown
- Large-cap funds: +$2.35B (sharply down from $11.91B)
- Mid-caps: –$1.36B
- Small-caps: –$889M
- Healthcare: +$777M (first inflow in four weeks)
📈 Investors Rotate Into Bonds
Bond fund demand surged:
- Total bond inflows: +$8.96B (vs. $4.63B prior week)
- Short-to-intermediate government/Treasuries: +$3.01B
- Short-to-intermediate IG credit: +$2.06B
- General taxable fixed income: +$1.96B
💵 Cash Moves
- Money market funds saw $4.8B in net outflows after three weeks of inflows — another sign investors are reallocating toward fixed income.
🔎 Takeaway
Investors are cooling enthusiasm for high-valuation AI and tech stocks, rotating instead into bonds and defensive sectors as macro uncertainties — especially labour market softness — begin to reshape near-term risk appetite.