Money rushes into US stocks at fastest pace this year; $ 27 b in July so far
Thursday, 18 July 2013 00:00
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US equity mutual funds and exchange traded funds (ETFs) have received $27 billion so far in July, the fastest rate of inflows this year, according to research firm TrimTabs.
Those inflows have helped push the S&P 500 and Dow to fresh record highs and led some strategists to forecast further gains for US stocks this year.
Sam Stovall, Chief Equity Strategist at S&P Capital IQ, said US equities were likely to perform just as well in the second half of the year as they did in the first half.
Earlier this week, Dennis Gartman, founder and editor of The Gartman Letter said he expected further gains after the recent correction in equities. “I think we’re likely to see newer highs in the not too distant future,” Gartman told CNBC on Monday.
According to TrimTabs, $6.6 billion has flowed into US equity mutual funds this month, while $20.4 billion has flowed into US equity ETFs. On Friday, 12 July alone, inflows into US equity ETFs hit $7.8 billion, the biggest daily inflow this year.
Sean Darby, Chief Global Equity Strategist at Jefferies, told CNBC on Wednesday, he expects the S&P 500 to rise a further 3.5% to 1,735 by the end of the year because a steepening yield curve (the difference between short-term and long-term borrowing costs) is positive for stocks, particularly banks.
“I think what you’re seeing now in the performance of US financials is indicative that we’re probably going to see quite a strong credit cycle in the US which is generally very good for equities,” Darby said.
The S&P 500 has risen 17.5% since the start of 2013, making it among the top performers globally this year and Darby believes US equities are fairly valued and companies are flush with cash.
“They have got too much money and they don’t necessarily know what to do with it. I don’t think we’ve got any signs of financial distress or balance sheet issues that will suggest that equities are going to trade on the weak side,” he said.
