U.S. Equity Funds See Largest Weekly Outflow in a Month as Tech Selloff and Trade War Fears Mount

U.S. equity funds just posted their biggest weekly outflow in four weeks, with investors pulling a net $9.54 billion in the week leading up to March 5. The outflows were driven by a sharp selloff in the tech sector, mounting trade war concerns following President Trump's steep tariffs on imports from Canada, Mexico, and China, and weaker-than-expected economic data.

This marked the largest weekly net withdrawal since investors pulled $10.71 billion a month ago.

Small-cap funds experienced the most significant losses, with net outflows reaching $3.48 billion—the largest since December 18. Mid-cap funds also faced substantial redemptions, amounting to $2.06 billion. In contrast, large-cap funds bucked the trend, attracting $2.93 billion in net inflows.

Sector-specific funds were hit hard, with investors withdrawing approximately $4.48 billion. The technology sector saw the heaviest selling, with outflows totaling $1.9 billion, followed by industrials at $1.13 billion and financials at $788 million.

As risk aversion intensified, investors sought refuge in safe-haven assets. Money market funds saw inflows of more than $51 billion over the past week, pushing total assets to a record $7.03 trillion as of Wednesday.

Additionally, short- to intermediate-term government and Treasury funds recorded net inflows of $1.8 billion—the highest in a week since January 15.

The market now turns its attention to Friday's nonfarm payroll report. However, disappointing ADP private payroll data and the highest job cuts since 2020—exacerbated by layoffs linked to the Department of Government Efficiency (DOGE)—have heightened concerns about economic momentum, raising fresh recession warnings.