NEW YORK (Reuters) – U.S. fund investors sucked $23.9 billion out of the stock market during the latest week, marking the largest withdrawals from those funds on record, Lipper data showed on Thursday, as the benchmark S&P 500 and Dow Jones Industrials indexes sank further from their record highs.
The withdrawals from U.S.-based equity exchange-traded funds (ETFs) and mutual funds took place during the week ended Feb. 7, according to the research service, whose records date back to 1992.
“We’re seeing a flight to safety here, money leaving equities, a lot of money going to money markets,” cash-like investments that took in $30.8 billion during the week, said Pat Keon, senior research analyst for Thomson Reuters’ Lipper unit.
“The market’s overbought. It’s due for a correction and looking for a reason, and I think it kind of found it with this,” he said.
The Dow .DJI plunged more than 1,000 points on Thursday. That represented a full market correction, defined as a 10 percent drop from the 52-week high. The S&P 500 <.spx> dropped 3.7 percent to a new low for the week.
The declines followed a catalyst that, at first, seemed positive: U.S. wages increased at their largest annual pace in more than 8-1/2 years, data showed last Friday.
But rising wages could crimp corporate profits and push up inflationary pressures, forcing the U.S. Federal Reserve to raise interest rates and tighten economic conditions faster than expected.
That possibility along with rising rates gave markets an excuse to pause a long run-up that pushed the S&P 500 up some 20 percent in 2017 and almost another 8 percent in the first 18 days of the new year alone.
Sector Flow Chg % Assets Assets Count
($blns) ($blns)
All Equity Funds -23.895 -0.33 6,807.397 12,167
Domestic Equities -28.004 -0.57 4,635.164 8,671
Non-Domestic Equities 4.109 0.18 2,172.232 3,496
All Taxable Bond Funds 3.112 0.12 2,629.007 6,049
All Money Market Funds 30.815 1.17 2,665.631 1,019
All Municipal Bond Funds 0.675 0.17 401.881 1,472
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