Overseas capital is flowing to the US stock market

Foreign net purchases of US equities

12-month sum, Billion $

Source: Federal Reserve Bank of St. Louis, U.S. Treasury International Capital Report, as of May 31, 2026.

There are many catalysts for the nearly four-year-old equity bull market, including a growing economy, very strong corporate profits, and the AI boom. As the chart illustrates, foreign investors have been drawn to these favorable fundamentals, purchasing nearly $1 trillion more in US equities than they have sold over the past twelve months—a record.

This foreign demand may surprise some, given heightened geopolitical and cross-border tensions. US tariff policy and the conflict with Iran are deeply unpopular in many countries. But those concerns matter more to policymakers than to investors, who remain drawn to stronger US economic and earnings growth, unparalleled access to the technology sector, and exposure to the world’s reserve currency.

The chart also highlights that foreign investment flows can turn sharply negative when market conditions deteriorate. Thus, they are unlikely to support US asset prices during periods of stress and could amplify a selloff.

What we’re watching this week

Wednesday: The Federal Reserve’s Open Market Committee meets to set monetary policy. Analysts expect no change in interest rates, but a vigilant tone on fighting inflation.

Thursday: The PCE price index—the Fed’s inflation focal point—is released for June. Economists are looking for a slight decline, but the resurgence in energy prices in July may make this data point less relevant.

Throughout the week: Four of the Magnificent Seven companies report second-quarter earnings: Microsoft, Meta, Apple, and Amazon.