U.S. Stock Funds Manage Slow Ascent In July.(B)(Mutual Weekly Special)

Byline: Peter McKenna

Funds were stuck in a nasty rut in July as both the Big Board and Nasdaq fell into an irritating pattern of quick rallies and even quicker declines.In the four weeks ended Wednesday, 4,274 U.S. stock funds tracked by Morningstar had returned a paltry 0.53% for the month. Do that every month, and you'd end up with a 7% annual return, about half the 15.8% average annual return for the past three years.

Morningstar tracks 152 funds in the hallowed

tech sector. These funds managed to return just 1.93% in the month. Tech funds were up 5.63% for the year and up 93.99% for the one-year period.

What's behind the limp-wristed performance in July? Despite the Federal Reserve's decision to stand pat in June and despite Fed Chairman Alan Greenspan's market-friendly Humphrey Hawkins testimony late this month, the fear of higher rates in August has kept a vise grip on the market. Investors nervously await each fresh …