S&P 500 fund sees biggest single-day inflow ever for an ETF after Fed signals rate cuts

• The SPY pulled in $20.8 billion on Friday, the largest one-day inflows for any ETF, Bloomberg reported.
• The massive figure follows as US stock indices have rallied on a potential Fed pivot.
• Friday inflows were also boosted by fund rebalancing and an options expiry.

Wall Street's largest and oldest exchange-traded fund notched the highest one-day inflow on record for any ETF, Bloomberg reported.

The $478 billion SPDR S&P 500 ETF, or the SPY, pulled in $20.8 billion on Friday. For the week, SPY raked in $24 billion in total, also considered a record in its 30-year history.

The remarkable inflows mirror a broader stock market rally that has boosted indices towards record territory, climbing on strengthened expectations that the Federal Reserve will cut interest rates next year.

For instance, the S&P 500, which the SPY tracks, has climbed nearly 14% since November, as signs of cooling inflation boosted rate-cut hopes.

And at last week's Fed meeting, policymakers signaled the potential for three rate cuts next year, leading markets to price in odds that they are likely to start in March.

Friday's inflows were further boosted by fund rebalancing, an event in which funds realign their investments with updated index compositions, according to Bloomberg. 

Meanwhile, a record $5.4 trillion options expiry also took effect, meaning traders either roll over existing positions or open new ones, prompting higher trading volumes and bursts of volatility. 

Still, SPY's inflows weren't echoed by every ETF. The Invesco QQQ Trust Series 1 fund notched a $5.2 billion outflow the same day, despite a rise in the Nasdaq 100 that it tracks. The figure marks the biggest single session outflow since 2000.