Individual Traders Pump $12 Billion Into US Stocks
Retail investors are doubling down on US equities despite mounting losses, pouring over $12 billion into stocks in the week ending March 19, according to JPMorgan Chase & Co. The buying spree comes as the broader market struggles with trade turmoil and economic slowdown fears.
The surge in retail trading activity was well above the 12-month average, noted Emma Wu, a global equity derivatives strategist at JPMorgan. Historically, retail traders are among the last to retreat from the market, making their continued buying a potential signal that stocks haven’t hit bottom yet.
Retail Traders Facing 7% Losses
Despite their enthusiasm, retail investors are facing growing losses. According to Wu:
- The average retail trader is now down 7% year-to-date.
- The S&P 500 has declined 3.7% as of Thursday’s close.
- On Friday, the benchmark index fell as much as 1.1% in early trading.
The latest drop follows disappointing forecasts from major US corporations, including FedEx, Nike, Micron Technology, and Lennar, adding to economic uncertainty.
Retail Traders Diverge from Institutions
Since the market downturn began in late February, retail traders have remained aggressive buyers, in stark contrast to institutional investors, who have been rotating out of US stocks at a record pace.
However, Bank of America reported that both institutional and private clients bought stocks at a rapid pace in the week through Wednesday. Global stock funds saw $43.4 billion in inflows, the largest this year.
Wall Street Turns Bearish
While retail traders continue to bet on a rebound, Wall Street strategists are growing more cautious:
- Goldman Sachs, Citigroup, and HSBC all downgraded their outlooks for US equities.
- Morgan Stanley’s Michael Wilson warned that the US stock market is unlikely to hit new highs in the first half of the year.
Sentiment vs. Action
Despite extreme bearish sentiment, retail traders keep buying. A measure from the American Association of Individual Investors showed bullish sentiment below 20% for three consecutive weeks, recovering only slightly in mid-March.
“It shows that what people are saying and what they are doing have become dislodged,” said Mark Hackett, chief market strategist at Nationwide, emphasizing the disconnect between negative sentiment and continued buying activity.
