The S&P 500 is down almost 23% this year amid a torrent of bad news, with the latest a stubbornly high inflation report. Oddly, however, stock investors may finally (or perhaps temporarily) be taking heart, judging from a reversal of investment inflows to stock exchange-traded funds.
Flows to equity ETFs were positive in September’s final week and October’s first. This week’s initial three days had an inflow of $5.2 billion, exceeding the number for all of the previous week, according to data from etf.com.
Not only that, Cathie Wood’s once-celebrated flagship ETF, Ark Innovation, has begun to attract new money again, after months of chronic outflow. And that’s despite the fund’s losing 62% this year and 18% in the past three months. It is up nearly $1.2 billion this year.
Over the past three months, the fund—which specializes in tech stocks she judges will be disruptive in the future, such as mobile payments provider Block and online healthcare company Teladoc Health—has suffered $533 million in outflows. The fund flow began to improve in September’s final week, when it turned mostly positive. The first three days of this week, the ETF is back in the red.
For the stock market as a whole, more ill tidings came Thursday morning, as the Consumer Price Index continued to run hot. Factor in such festering problems as escalating interest rates, the Russia-Ukraine and the prospect of a recession, and there’s not a lot for investors to be happy about.
Still, the stock market shrugged off the small improvement in the CPI—it was up 8.2% for the 12 months through September—and the S&P 500 advanced 2.6% on Thursday after six consecutive trading sessions of losses.
Many theories are circulating for why the Thursday rally occurred, ranging from short covering to technical resistance to the S&P 500’s going below 3,500 (the index finished at 3,670.) Maybe it’s a matter of exasperation with negative outlooks. “People just realized the prolonged beating of risk assets has to end some time,” Larry Weiss, head of equity trading at Instinet, told Bloomberg.