Investors Pulled $30 Billion from the US Stock Market
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This is Your Money Matters from The Wall Street Journal.
Welcome to Your Money Matters. I'm Jennifer Strong in New York. Investors are pulling a steady stream of money out of the U.S. stock market. Here in the studio with the details is The Wall Street Journal's Ben Eisen.
Why are investors pulling $30 billion from U.S. stock funds?
Ben, you say investors have pulled about $30 billion from the markets?
Yeah, you've seen this happen for about 10 weeks now. You've had 10 consecutive weeks of investor outflows from mutual funds and exchange-traded funds. And that's often a good proxy for where money is flowing in the market. And the fact that you've seen people pulling money out of U.S. stocks, we should be clear here, this is U.S. stocks, it's the longest streak since 2004.
And the withdrawals are adding to concerns, you say, about a bull market that's starting to look expensive by several measures.
Yeah, I mean, this is something I feel like people have been saying this for months and months now that we've had this big rise in the stock market for a while now, particularly after the election. So some measures of valuation are starting to look expensive. The price to earnings ratios are sort of a traditional measure of how expensive stocks are, are pretty far above average. And you're seeing a lot of investors start to grow concerned because they're sort of wondering why is the market rising as much as it has?
Yeah. Now, a lot of focus is on Washington, and that's unlikely to change anytime soon, given that before it can tackle something like the tax code, Congress needs to deal with the debt ceiling, pass a spending bill.
Yeah, there's definitely a lot on lawmakers' plate in Washington. The stock market is really, it got that boost after the election because investors were sort of betting that Donald Trump's presidency would be marked by all these business-friendly policies, that you'd get tax cuts, tax code reform, get infrastructure spending, you'd get all these things that would sort of boost corporate profits and
How long has the outflow streak lasted and why does it matter?
You haven't exactly gotten that yet. Corporate earnings have been strong, but the sort of boost from Washington that helped propel the stock market higher hasn't yet played out. So that's sort of another factor that people are focusing on. And you've started to see the market twist and turn a little bit in recent weeks with some of the prospects for legislation getting passed this year.
And you say, given all that's going on, it's really no surprise investors are starting to look at international stocks.
Yeah, this is actually a trend that's sort of been playing out all year, that you sort of have this re-acceleration of global growth. You've seen growth pick up in places like Europe, and China has stabilized, and that's sort of been a cue for a lot of investors to move from the U.S. stock market into international markets. And also, even in the U.S. market, investors are sort of moving away from some of these domestically focused stocks and into countries
companies that derive a lot of their their revenues from overseas because the international arena is starting to look more attractive than it has in a long time we're talking about the market with ben eisen and you're listening to your money matters from the wall street journal thanks for listening everyone ben what else are you going to have an eye on this week
You know, we've got a lot of economic data coming up. We have a jobs report on Friday where people are going to be looking to see if wages rise, if it marks sort of an acceleration. We have a GDP report where we'll get a read on second quarter growth and see if it's see how much it's bounced back from the first quarter. We've also got a lot of numbers on sort of manufacturing and industrial production, and we'll see sort of what's going on there. And I think that sort of plays into that theme of just U.S. economic growth. People are looking to see, you know, how quickly is the U.S. growing relative to the rest of the world, and I think that's going to have a lot of impact on the stock market going forward.
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