Trending stocks this week as earnings and inflation shape Wall Street

Investments into U.S. equities nearly tripled this week, according to Jefferies, a financial firm. The surge was driven by renewed interest in exchange-traded funds (ETFs) tracking the S&P 500 index and the tech-focused Nasdaq 100. During this period, $18.58 billion flowed into equities, compared to $6.26 billion during the previous week.

The SPDR S&P 500 ETF Trust alone saw weekly inflows of $12.52 billion, marking a significant turnaround from $15.23 billion outflows in the prior week. Similarly, the Invesco QQQ Trust recorded inflows of $4.29 billion, building upon a surge of $10.18 billion in the preceding week. Analysts from Jefferies, led by Steven DeSanctis, noted that roughly half of the tracked funds experienced inflows during the week, with the SPY ETF rebounding to take in the majority of assets.

However, interest in the QQQ Trust continued to grow, as evidenced by the $4.3 billion inflow during the latest week. The analysts also highlighted the increasing focus on credit, citing substantial bond issuances. They observed inflows in categories like Aggregate and Investment Grade fixed income. Moreover, the technology sector, a primary driver of the AI trade, witnessed a resurgence in August after a significant decline in July.

Chip stocks, once struggling, showed a stellar start to the month. However, they experienced a slight setback this week due to a lack of major AI-related earnings. The technology sector, overall, saw outflows for the second consecutive week, primarily driven by a $1.4 billion drain from semiconductors. While there were few outflows across the main categories, investors showed a diminishing interest in momentum investing.

The focus on financials and discretionary sectors also cooled down, while the industrials faced a decline in their appeal. The analysts' main concern pertained to high-yield fixed income, noting a significant outflow of $495.6 million this week, following inflows of $950.8 million the week before. Apart from the SPY ETF, some other popular ETFs that track the S&P 500 include the Vanguard S&P 500 ETF and the iShares Core S&P 500 ETF.