NEW YORK (

TheStreet

) -- U.S. stocks have been going gangbusters since early October but Main Street is still wary.

Mutual funds investing in bonds saw inflows of $8.38 billion in the week ended Feb. 22, according to data released Wednesday by the Investment Company Institute, which bases its flow estimates on information collected covering "more than 95 percent of industry assets" which is then adjusted to represent industry totals.

Stock funds, on the other hand, enjoyed inflows of just $809 million, and what's worse is that funds investing in domestic equities saw outflows for the first time in three weeks, seeing $322 million walk out the door. Hybrid funds, which invest in both stocks and bonds, saw inflows of $1.6 billion, the lowest total in five weeks, ICI data showed.

All three major U.S. equity indices have reached multi-year highs this week with the

Dow Jones Industrial Average

closing above 13,000 for the first time since May 2008, the

Nasdaq Composite

cresting above 3,000 in intraday action on Wednesday, and the

S&P 500

breaking through resistance at 1370 on Tuesday.

Since the calendar turned, the Mom and Pop investors for whom mutual funds are a primary investment vehicle have stopped taking monies out of funds investing in stocks at the high rates seen through much of 2011. That shows less fear about equities, but it's not exactly indicative of confidence as inflows have remained miniscule.

Credit Suisse was seeing some glimmers of interest in stocks from mutual fund investors ahead of the ICI data.

"Equity funds experienced hefty net outflows of $23.4bn per month, on average, from June through December 2011," the firm observed. "The outflow from equity funds slowed dramatically in January, to -$0.2bn, and partial data for February suggest the bleeding has stopped, at least for now."

The firm noted that this may not bode very well for the broad market though as Main Street's embrace is usually a contrarian indicator for stocks.

"Even if we accept the potentially premature view that households are now prepared to purchase equities, history provides a warning signal," Credit Suisse said. "Just when retail investors commit to equity investments in size, the market often turns against them. Evidence abounds of households buying high and selling low."

Given the extreme volatility of the last few years, the firm thinks Mom and Pop may stay mostly on the sidelines when it comes to equities for a while yet.

"Also, two major equity market downturns within the last ten years and the collapse of housing values, combined with sharply tighter credit conditions, have exposed household finances to a degree of volatility not seen in decades," Credit Suisse said. "Against this backdrop, expecting retail investors to be consistent supporters of the equity market may be asking too much."

Shortly before the closing bell, stocks were lower across the board on Wednesday as Federal Reserve Chairman Ben Bernanke's testimony before Congress seemed to lay some preliminary groundwork for taking the prospect of additional stimulus off the table because of inflation concerns.

--

Written by Michael Baron in New York.

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Michael Baron

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