US equity funds draw weekly inflows as investors regain confidence

US investors became more confident after witnessing a market boost as AI technology stocks were rising, leading them to invest more money into U.S. stock market funds during the week.

Latest update reveals U.S. equity funds drew inflows in the week to May 27 as a rally in Artificial intelligence-linked technology stocks lifted sentiment, ‌though concerns surrounding the U.S.-Iran peace negotiations kept purchases in check.

According to LSEG Lipper data, investors bought a net $1.97 billion of U.S. equity funds, compared with a net $12 billion of selling in the previous week.

Nvidia highlighted robust demand for its flagship AI chips last week, fueling inflows into technology sector funds.

Investors bought a net $2.75 billion of technology sector funds in an eighth successive week of buying. Financial and industrial sector funds also attracted inflows of $987 million and $880 million, respectively.

U.S. bond ‌funds were popular for the sixth successive week, gaining a net $10.62 billion of weekly inflow during the week.

General domestic taxable fixed income funds, short-to-intermediate investment-grade funds, municipal debt funds, and short-to-intermediate government and treasury funds had noticeable inflows at $2.74 billion, $2.38 billion, $2.33 billion and $2.02 billion, respectively.

The positive sentiment was largely driven by a rally in technology stocks, particularly companies linked to artificial intelligence and major tech firms.

The latest development also reflects improving investor confidence in the broader U.S. market.

It comes as strong performance in the tech sector can also influence overall market sentiment because technology companies hold vital positions in major stock indexes and are often viewed as indicators of economic and innovation-driven growth.

US equity funds:

US equity funds are investment funds that mainly buy US stocks or equities, such as mutual funds or exchange-traded funds "ETFs."

When technology shares rise sharply, investors often become more optimistic about market growth and future corporate earnings, leading them to increase investments in equity markets.