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Investors cooling on stocks after strong January

Sat., Feb. 23, 2013, midnight

Fed minutes ruffle Wall Street

Investors have been plowing billions of dollars into stocks this year, but new data show the torrent of money has been slowing this month – particularly into U.S. equities.

Starting in January, investors began pouring into stocks after President Barack Obama and Congress defused much of the “fiscal cliff.” The Federal Reserve, meanwhile, has nudged investors into riskier assets like stocks by lowering interest rates and making safer investments less attractive.

In the week ending Jan. 16, investors shoved $9.2 billion into equity mutual funds, according to data from the Investment Company Institute.

But the inflows have been tapering off, and in the week ending Feb. 13, investors put $5.7 billion into stock funds.

The slowdown into domestic stocks has been more pronounced. In the week ending Jan. 16, investors put $4.9 billion in U.S. equity funds. By the week ending Feb. 13, the inflow had slowed to $509 million, according to ICI data.

The ICI data preceded the Federal Reserve minutes that made Wall Street jittery earlier this week. The meeting minutes suggested that the central bank may reverse easy-money policies sooner than expected.

But some Fed officials have since signaled that the central bank would not scale back monetary stimulus programs anytime soon.

“Fed policy is very easy, and it’s going stay easy for a long time,” James Bullard, president of the St. Louis Fed, told CNBC on Friday morning.

In a speech in New York on Thursday, John Williams, president of the San Francisco Fed, said: “I anticipate that purchases of mortgage-backed securities and longer-term Treasury securities will be needed well into the second half of this year.”


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