Investors are moving away from US stocks at the fastest pace since March, according to a note published by Bank of America. US equity funds recorded outflows of $17.2 billion during the week ending 1 July, according to a note from the team led by Michael Hartnett, citing data from EPFR Global.
Investors instead turned to other global equities, with Japanese stocks attracting inflows of $1.9 billion — the largest in seven weeks. Investor sentiment toward US stocks is shifting after a strong start to the year in terms of fund inflows.
US equity funds last week recorded their first redemptions in three months. Continued scepticism over elevated valuations tied to artificial intelligence kept pressure on chipmakers' stocks this week, with the Philadelphia Semiconductor Index falling 11% over the past two days.
Strategists at JPMorgan Chase wrote earlier this week that the sharp outperformance of US semiconductor stocks relative to major AI-linked cloud computing companies had created an unsustainable valuation gap, which they expect will ultimately narrow.
Overall, equities recorded outflows of $13.9 billion, while investment-grade bonds attracted inflows of $17.2 billion. In other markets, high-yield bond funds attracted inflows of $3.4 billion, the largest in more than a year.