Investors rotated billions of dollars back into equities last week, pulling money from ultra-short Treasury and leveraged exchange traded funds while pouring cash into broad market index funds as optimism mounted for a potential end to the Iran war.
Key Takeaways:
- QQQ drew $6.5 billion as S&P 500 ETFs collectively attracted over $7.5 billion amid the Nasdaq’s longest win streak since 1992.
- Treasury ETFs BIL and SGOV saw combined outflows of $5.4 billion as investors rotated out of defensive positions.
- The S&P 500 crossed 7,000 and finished the week up 4.5% on Israel-Lebanon ceasefire news and Iran reopening the Strait of Hormuz.
The Invesco QQQ Trust (QQQ ) attracted $6.5 billion in flows last week, according to ETF Database, while three S&P 500-tracking ETFs collectively pulled in more than $7.5 billion. The State Street SPDR S&P 500 ETF (SPY ), iShares Core S&P 500 ETF (IVV ) and Vanguard S&P 500 ETF (VOO ) all saw strong inflows.
The inflows came as the Nasdaq Composite posted its longest winning streak since 1992 and the S&P 500 crossed the 7,000 threshold for the first time, driven by hopes for a peace deal between the U.S. and Iran.
The rotation away from defensive positions was equally pronounced. The State Street SPDR Bloomberg 1-3 Month T-Bill ETF (BIL ) saw outflows of $3.5 billion, according to ETF Database, while the iShares 0-3 Month Treasury Bond ETF (SGOV ) shed $1.9 billion.
President Donald Trump said Thursday that Israel and Lebanon agreed to a 10-day ceasefire, which went into effect at 5 p.m. ET that day, CNBC reported. The announcement followed Trump’s comments earlier in the week that the Iran war is “very close to over” and that Tehran wants to "make a deal very badly.”
The ProShares UltraPro QQQ (TQQQ ), a leveraged ETF providing three times the daily performance of the Nasdaq-100, saw outflows of $1.9 billion, according to ETF Database. The Direxion Daily Semiconductor Bull 3X ETF (SOXL ) shed $2.2 billion.
Equity Momentum Builds
The S&P 500 fully recovered its losses from the Iran war early in the week, then broke above 7,000 for the first time on Wednesday with a 0.8% gain to 7,022.95, according to CNBC. By Friday, the benchmark closed at 7,126.06 after Iran declared the Strait of Hormuz “completely open” for commercial shipping during the ceasefire period.
Among the S&P 500 funds, SPY pulled in $2.9 billion last week, according to ETF Database, while IVV attracted $2.4 billion and VOO drew $2.3 billion. The three funds track the same index but differ in structure and fee levels.
Friday’s rally came after Iranian Foreign Minister Seyed Abbas Araghchi wrote on X that “the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire,” according to CNBC. U.S. West Texas Intermediate futures dropped almost 12% to settle at $83.85 a barrel on the news.
Beyond equities, the SPDR Gold Shares (GLD ) attracted $1.8 billion last week, according to ETF Database. The iShares Russell 1000 Value ETF (IWD ) saw outflows of $1.3 billion.
For the week, the S&P 500 rose 4.5%, while the Nasdaq advanced 6.8% and the Dow added 3.2%, according to CNBC.
Top ETF Flows Last Week
| Ticker | Fund Name | Flows ($M) |
|---|---|---|
| QQQ | Invesco QQQ Trust | $6,500 |
| SPY | State Street SPDR S&P 500 ETF | $2,881 |
| IVV | iShares Core S&P 500 ETF | $2,401 |
| VOO | Vanguard S&P 500 ETF | $2,311 |
| GLD | SPDR Gold Shares | $1,802 |
| BIL | State Street SPDR Bloomberg 1-3 Month T-Bill ETF | -3,472 |
| SOXL | Direxion Daily Semiconductor Bull 3X ETF | -2,185 |
| TQQQ | ProShares UltraPro QQQ | -1,871 |
| SGOV | iShares 0-3 Month Treasury Bond ETF | -1,870 |
| IWD | iShares Russell 1000 Value ETF | -1,343 |
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