Two major independent fund-flow tracking services reported net outflows from U.S. stock funds for the week ended March 17, suggesting that investors were unnerved enough by the March 11 bombings in Madrid to head for the exits.

"There were an awful lot of headlines last week that caused investors to be spooked," says Sam Stovall, senior investment analyst at Standard and Poor's.

Trim Tabs, based in Santa Rosa, Calif., says investors pulled out $1.6 billion more from U.S. equity funds than they put in during the week ended March 17. The $1.6 billion in outflows continues a March trend away from equity funds. Last week, stock funds took in $700 million in new money for the week ending March 10, compared with inflows of $4.5 billion for the week completed March 3, according to company data.

Trim Tabs surveys 20% percent of all U.S. equity and bond funds, or 90% percent of all U.S. fund families.

Separately, Arcata, Calif.-based AMG Data Services reported equity outflows of $22 million for the week ending March 17, with fewer share classes reporting inflows than in any week since early October 2003.

According to AMG, investors yanked $922 million from small-cap growth funds, the largest net cash outflow since July 2002.

AMG calculates fund flows by tracking 17,000 shares of open-end mutual funds corresponding to $6.3 trillion in value.

Robert Pavlik, portfolio manager at Oaktree Asset Management, says a larger-than-usual outflow number was to be expected, because the week included volatile trading sessions following the terrorist bombings in Madrid that killed more than 200 people and wounded more than 1,500.

"The outflows reflect the uncertainty over the last few weeks, including the bombings in Spain," said Pavlik. "Plus, investors got nervous with the talk of a correction in the market."

Pavlik suggests next week's Trim Tabs results might show an increase in inflows after the March 16 Federal Reserve meeting, at which policymakers said that "job losses have slowed," suggesting an improvement in the economy. The Fed also said they will be "patient" in holding down borrowing costs, voting to keep interest rates at 1%, a 46-year low.

"The outflows are not surprising at all," says Richard Williams, director at Next Generation Equity Research. "We are part way through a correction, and it is not sure what the magnitude is going to be. In fact, it might be a hint as to whether we head downwards more steeply."

Williams says the fund-flow results from upcoming weeks will carry even greater weight as the market enters earnings season.

"We are coming into preannouncement season, and that will be a critical time for the market. We need to see how many companies might have to lower their earnings guidance," says Williams.

Trim Tabs also reported that international stock funds had inflows of $100 million, down from $400 million the prior week. Overall, bond funds had outflows of $800 million, vs. inflows of $100 million the prior week. Fixed-income funds saw inflows of $200 million for the week ending March 3.