Home / Business and Economy / Investors Dump US Stocks, Seek Refuge in Cash as Tariffs Bite
Investors Dump US Stocks, Seek Refuge in Cash as Tariffs Bite
8 Aug
Summary
- $28 billion redeemed from US stocks in a week
- $107 billion inflows to money market funds, biggest since January
- Average tariff rate at highest level since WWII
In the week leading up to August 8th, 2025, investors have been pulling money out of US equities and flocking to cash funds, according to Bank of America's strategist Michael Hartnett. Nearly $28 billion was redeemed from US stocks during this period, while money market funds attracted around $107 billion in inflows, the biggest such influx since January.
The shift in investor sentiment comes amid renewed concerns that the sweeping tariffs imposed by the US government are crimping economic growth. Data shows a slowdown in the US labor market, and investors are also worried about the outlook for corporate earnings as the new levies took effect just last week. The average tariff rate has now risen to 15.2%, well above the 2.3% level seen a year ago and the highest since the World War II era.
With the focus turning to the Federal Reserve, swaps markets are pricing in about 100 basis points in rate cuts by mid-2026. Hartnett said a majority of the bank's clients are betting on a "Goldilocks" outcome, where lower rates would fuel a rally in equities. However, the strategist has also warned of a potential equity market bubble in recent weeks.
