Investors brushed off the Federal Reserve's cautious tone last week, pouring $37.6 billion into U.S.-listed ETFs, a clear sign that optimism in equity markets remains intact even as policymakers tap the brakes on rate-cut expectations.
- SPY is back at the top with regard to inflows. Check its prices real-time.
U.S.-listed ETFs attracted the massive amount during the week ending Oct 31, according to ETF.com, another in a series of strong showings for risk assets. The SPDR S&P 500 ETF Trust (NYSE:SPY) was the leading fund, with a whopping $4.4 billion in net creations, while the Vanguard S&P 500 ETF (NYSE:VOO) added $4.3 billion.
The Fed delivered a widely expected rate cut last week, but Powell’s tone quickly turned cautious, hinting that a December cut wasn’t guaranteed. That was enough to send bond yields higher and futures markets into a mild recalibration. Yet none of it slowed the ETF buying spree.
Tech Still The Center Of Gravity
For the week, tech ETFs dominated the flow tables once again. The Vanguard Information Technology ETF (NYSE:VGT) picked up $2.1 billion in flows, while the Invesco NASDAQ 100 ETF (NASDAQ:QQQM) gained more than $1 billion in value. With Nvidia Corp (NASDAQ:NVDA) and Amazon.com Inc (NASDAQ:AMZN) at the forefront of the market’s upside momentum, growth-oriented funds represent the preferred vehicle for investors still looking to catch the long side of the AI-fueled rally.
Even broad-based funds like the Vanguard Total Stock Market ETF (NYSE:VTI) and the Schwab U.S. Large-Cap Growth ETF (NYSE:SCHG) saw inflows north of $1 billion, underlining the persistent appetite for megacap exposure.
The Bottom Line: Powell Talks, SPY Walks
Investors are clearly more interested in momentum than messaging, despite Powell’s best efforts to inject a dose of reality. Small caps and defensive assets like the iShares Russell 2000 ETF (NYSE:IWM) and SPDR Gold Shares (NYSE:GLD) surprisingly saw outflows, as large-cap growth names dominated. Well, if the Fed hopes to slow sentiment, it may take more than a few stern words because for now SPY and friends remain the market’s favorite.
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