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Investors favoring bonds over stocks

October 18, 2012: 10:43 AM ET

Investors pulled nearly $2.3 billion from U.S. stock mutual funds last week. That brings the total 2012 outflow to almost $105 billion.

Investors continued to pull out of U.S. stocks last week, as worries about slowing global growth and a lackluster start to the third-quarter earnings period dampened investors' spirits.

U.S. stock mutual funds lost $2.3 billion during the week ended Oct. 10, according to data from the Investment Company Institute. That was far less than the prior week, when investors yanked $10.6 billion. Nonetheless, it still marked the 12th straight week of outflows.

Pessimism toward the stock market continued as the World Bank downgraded its outlook for growth in Asia and warned that worsening conditions in Europe could add pressure to Asia's economy. Investors also geared up for a potentially disappointing earnings season, as Alcoa (AA) reduced its forecast for global aluminum demand due to the slowdown in China.

Related: Worried about the fiscal cliff: Should I sell?

So far this year, U.S. stock mutual funds have bled nearly $105 billion. By comparison, those funds lost around $57 billion during the first nine months of 2010, and $80 billion during the first nine months of 2011.

Meanwhile, bonds continued to attract investors seeking safety.  Bond funds raked in $10.9 billion last week, up from an average of about $6 billion a week this year, and the most since the week ended Oct. 21, 2009.  So far this year, bond funds have drawn in more than $270 billion.

And ICI data show that hybrid funds, which invest in both stocks and bonds, brought in $139 million.

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Hibah Yousuf
Hibah Yousuf
Reporter, CNNMoney

Hibah Yousuf is a reporter at CNNMoney, where she covers stocks, bonds, commodities and currencies trading across the globe, as well as corporate earnings and other markets-related news. Prior to joining the site in 2009, she interned at Money Magazine.

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