US equity funds saw a significant inflow of capital in the week ending May 22nd. This surge, totaling $9.9 billion, reflects investor optimism driven by two factors: signs of slowing inflation and the possibility of the Federal Reserve cutting interest rates.
Early in the week, slowing inflation data from April fueled a positive outlook for risk assets. However, this mood shifted as data revealed a rebound in US business activity and lower unemployment claims. These indicators rekindled concerns about inflation, potentially delaying the Fed’s decision to cut rates.
Despite strong earnings from Nvidia, the broader US stock market closed lower on Thursday. This highlights the ongoing tension between hopes for lower interest rates and lingering worries about inflation. While investors remain optimistic, the future direction of the market likely hinges on the Fed’s next move.
Source: Reuters