Investors Plowed $15 Billion Into These ETFs After Fed Rate Cut

ETF investors were bullish on stocks after the Fed decision.

The S&P 500 surged to record highs and investors plowed money into ETFs in the day following the U.S. central bank’s decision to cut interest rates by a hefty 50 basis points (bps).

Investors added a whopping $14.7 billion to U.S.-listed ETFs on Thursday, pushing year-to-date inflows up to $678 billion, according to the latest data from Bloomberg.

The surge in inflows reflected investor optimism that the Federal Reserve was addressing widespread concerns about a slowing job market and potential recession in choosing the larger cut instead of a 25 (bps) reduction it was also weighing. The Fed had previously been focusing largely on taming inflation. 

The biggest flows went into a pair of S&P 500-tracking ETFs. The SPDR S&P 500 ETF Trust (SPY) and the Vanguard S&P 500 ETF (VOO) had daily inflows of $4.5 billion and $3 billion, respectively.

The Vanguard Extended Market ETF (VXF), which holds mid and small cap stocks, was another big flows winner, with inflows of $1.8 billion.

VXF rallied to a 2-1/2 year high on Thursday, but the ETF—which seeks to track all the stocks that aren’t included in the S&P 500—remains 8.5% below its all-time high set in late 2021.

Tech Winners

SPY, VOO and VXF were the only ETFs with inflows of more than $1 billion on Thursday, but a number of other ETFs registered several hundred million dollars of inflows. 

That includes the tech-heavy Invesco QQQ Trust (QQQ) and Invesco Nasdaq 1000 ETF (QQQM), which had daily inflows of $604 million and $338 million, respectively.

The VanEck Semiconductor ETF (SMH) also had a good day, with inflows of $409 million.

Like the broader market, tech has rebounded from its August lows, but QQQ and SMH remain 4% and 15% below their July highs, respectively.

By comparison, SPY is currently trading about 1% above its previous all-time high.

Outflows

While most ETFs saw buying on Thursday, notable flows laggards included the iShares iBoxx High Yield Corporate Bond ETF (HYG), the iShares 7-10 Year Treasury Bond ETF (IEF) and the SPDR Dow Jones Industrial Average ETF Trust (DIA), with outflows ranging from $350 million to $650 million.