July 31 (Reuters) - U.S. equity funds drew inflows in the week to July 29, snapping a two-week streak of outflows, as investors added exposure to mega-cap technology funds during a recent selloff on bets that the market rally could continue.
Investors bought a net $11.83 billion in U.S. equity funds, more than reversing the combined $10.68 billion in outflows recorded over the previous two weeks, according to LSEG Lipper data.
After last week's results from Alphabet and Tesla, which showed negative cash flows and weighed on the technology sector, strong earnings from Microsoft and Amazon on Thursday eased concerns over heavy capital spending and lifted the S&P 500 1.66%.
"Microsoft indicated further acceleration in cloud revenue growth for the current quarter, while Alphabet reported an increase in advanced cloud orders that have yet to be recorded as revenue," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
"We remain constructive on the AI growth story."
Investors bought a net $11.57 billion in U.S. large-cap funds, marking their largest weekly net purchase since June 24. Mid-cap and small-cap funds, however, saw outflows of $2.29 billion and $196 million, respectively.
Technology-sector funds attracted $4.9 billion, their largest weekly inflow since July 8. Financials and consumer staples also recorded net purchases of $1.96 billion and $751 million, respectively.
Meanwhile, inflows into U.S. bond funds slowed to a 15-week low of $1.34 billion during the week.
Net purchases of short-to-intermediate government and Treasury funds, as well as short-to-intermediate investment-grade funds, eased to $865 million and $1.08 billion, respectively, from $1.32 billion and $1.54 billion in the previous week.
Investors withdrew $466 million from general domestic taxable fixed-income funds but bought a net $761 million in municipal debt funds.
Money market funds recorded net outflows of $11 billion for a third consecutive week.
(Reporting by Gaurav Dogra; Editing by Sharon Singleton)