(Adds details on mutual funds and ETFs, analyst quote) By Trevor Hunnicutt and Lewis Krauskopf NEW YORK, May 17 (Reuters) - U.S. fund investors returned to equity markets in force during the latest week, pouncing on economic confidence in their home market, Lipper data showed on Thursday. Investors injected $10.1 billion into stocks as U.S. companies still seeing the benefits of a lower corporate tax rate continue to coast to higher profits. Healthcare stocks leapt on optimism that U.S. regulations on drug pricing could be tamer than feared. Domestic stock funds pulled in $9.1 billion, the most since March, while their international-focused counterparts pulled in about a tenth of that amount, according to the research service, whose data covers mutual funds and exchange-traded funds (ETFs) based in the United States for the seven days through May 16. "It is a positive sign for how investors are feeling about the markets right now," said Pat Keon, senior research analyst for Thomson Reuters' Lipper unit. Relatively strong economic conditions compared to other countries have helped push U.S. bond yields and the dollar higher. Those factors could still conspire to tighten financial conditions dramatically, but have not done so yet. That is good news for domestic stock funds that faced three straight months of withdrawals, threatened by the prospect of higher inflation and what was once a more bullish view on growth prospects outside the United States. The Russell 2000 index of smaller U.S. companies - less exposed than large companies to the negative effects of a stronger dollar and rising oil prices - closed at a record high on Thursday. NEW LEASE ON LIFE FOR HEALTH STOCKS Investors plowed $819 million into healthcare and biotech funds during the week, the most since July 2017, as U.S. President Donald Trump released his plan to lower drug prices. In a speech last Friday, Trump blasted drugmakers and healthcare "middlemen" for making prescription medicines unaffordable for Americans, but his administration avoided aggressive direct measures to cut prices. Analysts and investors have debated whether the speech and proposals would be a "clearing event" that paves the way for increased investor interest in the sector, which has underperformed in 2018. U.S.-based healthcare funds are on pace for their third straight year of withdrawals. Investors could still grow wary of the sector, with lingering concerns about healthcare becoming a major campaign issue as November's U.S. Congressional elections approach. The following is a breakdown of the flows for the week, including mutual funds and ETFs: Sector Flow Chg % Assets Assets Count ($blns) ($blns) All Equity Funds 10.084 0.14 7,296.570 12,290 Domestic Equities 9.109 0.18 5,008.483 8,761 Non-Domestic Equities 0.976 0.04 2,288.086 3,529 All Taxable Bond Funds 2.629 0.10 2,763.157 6,072 All Money Market Funds 13.616 0.51 2,691.745 1,042 All Municipal Bond Funds 0.207 0.05 404.104 1,454 (Reporting by Trevor Hunnicutt and Lewis Krauskopf Editing by Tom Brown and Chris Reese)
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