Retail investors have been actively purchasing stocks, especially amid some recent market fluctuations following Moody’s downgrade of the US credit rating. On Monday, from 12:30 PM to 12:30 PM ET, individual investors bought net stocks worth $5.4 billion, as reported by JPMorgan’s Trading Desk. Notably, retail buyers made up 36% of the total trading volume for the day, marking another record for this group.
The downgrade of the US sovereign credit rating from AAA to AA1 by Moody’s raised concerns about the increasing costs associated with the federal government’s fiscal deficit and its existing debts. Despite a slight decline of around 1% in the S&P 500 during quieter trading sessions, record retail buying helped the index see a small gain of 0.09% over six winning sessions. This year’s “Buy the Dip” attitude seems well established among Main Street investors. In April, for instance, retail traders net purchased $4 billion amidst tariff-related turmoil, setting a monthly record for inflows.
These purchases came at a time when Wall Street professionals were anxious about a potential recession arising from President Donald Trump’s protectionist policies, contributing to a shift in US asset dynamics. Nevertheless, the bond market reacted negatively to Moody’s downgrade, pushing up yields, with 30-year US bond yields exceeding 5%, and 10-year yields surpassing 4.5%. In a memo on Tuesday, JPMorgan noted that US stocks had similar patterns last week, with several dips occurring before the market saw a more sustained recovery, suggesting that retail investors and other companies might continue to act as consistent buyers.
