In the week ending February 4, inflows into U.S. equity funds moderated as cautious market sentiment, driven by a selloff in software stocks, dampened demand. However, strong earnings reports from Eli Lilly and Super Micro Computer provided some support to the market.

Data from LSEG Lipper showed that investors purchased $5.58 billion in U.S. equity funds during the week, a decline of approximately 48% compared to the net inflow of $10.82 billion recorded the previous week.

Last week, the artificial intelligence company Anthropic launched a legal-focused plugin for its generative AI chatbot, sparking concerns that the software industry could face significant business disruption. This development put pressure on software stocks, leading to declines.

Analyzing the flows by market capitalization style, U.S. large-cap funds attracted inflows of $1.1 billion. In contrast, mid-cap funds and small-cap funds experienced outflows of $1.59 billion and $1.67 billion, respectively.

From a sector perspective, investors injected $2.11 billion into industrial sector funds and allocated $1.44 billion to metals and mining sector funds. Conversely, they withdrew a substantial $2.34 billion from technology sector funds.

The bond fund market continued its trend of attracting capital. U.S. bond funds recorded inflows for the fifth consecutive week, with net inflows reaching $11.11 billion during the period.

Short-to-intermediate term investment-grade bond funds saw net inflows of $6.34 billion, marking the largest weekly inflow since at least 2022.

Municipal bond funds and inflation-protected bond funds also attracted significant inflows of $2.38 billion and $1.34 billion, respectively.

Meanwhile, U.S. money market funds experienced net subscriptions of $83.09 billion. This represents the highest weekly inflow since the week of December 3, when inflows reached $105.08 billion.