Data shows that retail investors launched a record “buying on dips” action this Monday, quickly reversing the 1% opening drop in the S&P 500 index triggered by Moody’s downgrade of the U.S. credit rating, with all three major indices ending the day in the green.
According to media reports, based on data compiled by JP Morgan’s quantitative and derivatives strategist Emma Wu, as of 12:30 PM New York time, individual investors net bought a record total of $4.1 billion in U.S. stocks, marking the first time this threshold was surpassed before noon.
After the market opened on Monday, the S&P 500 index briefly fell nearly 1.1%, but rebounded quickly in the afternoon. By around 2:50 PM New York time, the index returned to near flat. At the close, the S&P 500 index rose 5.22 points, or 0.09%, to 5963.60 points. The Dow Jones Industrial Average rose 137.33 points, or 0.32%, to 42792.07 points. The Nasdaq rose 4.36 points, or 0.02%, to 19215.46 points.
On that day, retail trading volume accounted for 36% of the overall market trading volume, setting a new historical high, surpassing the previous peak at the end of April.
Frank Monkam, head of macro trading at Buffalo Bayou Commodities, stated:
“Retail investors have previously missed opportunities during market rebounds due to hesitation, but now they seem to have a firm belief and do not want to make the same mistake again.”
This wave of buying intensity continues the trend of retail investors increasing their positions in U.S. stocks over the past few weeks. In April, when the stock market plummeted due to tariffs, bringing the S&P 500 close to a bear market, retail investors bought stocks at a record pace. Now, as the S&P 500 approaches the 20% rebound threshold and is about to enter a technical bull market, retail investors are also enjoying this recovery. Meanwhile, institutional investors, referred to as “smart money,” have largely remained on the sidelines.
In response to Moody’s downgrade, most strategists on Wall Street did not express excessive concern on Monday, but instead advised clients to continue buying stocks on dips. Morgan Stanley strategist Michael Wilson stated that the market pullback triggered by Moody’s downgrade is an opportunity to buy U.S. stocks, as the risk of economic recession has decreased following the tariff truce agreement between China and the U.S. Max Kettner, head of multi-asset strategy at HSBC, also mentioned that his team views any decline in risk assets as an opportunity to increase investments.
Vincent Lorusso, CEO and investment manager at Clough Capital Partners, believes that:
“In the context of declining inflation and healthy balance sheets for both businesses and consumers, retail investors are making intuitively correct choices by allocating capital to the most attractive risk-adjusted returns. They are sharp enough to identify these investment opportunities.”
According to JP Morgan’s data, retail investors’ buying power in individual stocks reached $2.5 billion on Monday, while the buying scale of exchange-traded funds (ETFs) was $1.5 billion. Among them, Tesla and Palantir were the most favored, attracting net inflows of $675 million and $439 million, respectively. In addition, retail investors also actively increased their holdings in Bitcoin-related ETFs, but continued to reduce their positions in Nvidia.
