The retail buy-the-dip move paid off. What that crowd of investors is doing now, according to JPMorgan.
Timing stock market ups-and-downs is a tricky feat, but congratulations are in order for retail investors, who appear to have done well in recent weeks by tearing a page out of Warren Buffett's 'be-greedy-when-others-are-fearful' playbook.
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'The buy-the-dip strategy in early April has clearly paid off,' said a team of JPMorgan strategists led by Emma Wu. 'We estimate retail investors' portfolio is up 15.1% since April 8, closely aligning with the market performance of +15.8%.'
Investors bought $50 billion in stocks as the market bounced from the S&P 500's SPX 52-week low of 4982.77 reached April 8, said the JPMorgan team.
'Notably, their buy-the-dip strategy and gradual buying during the subsequent rally (with a reduced pace) has historically been profitable,' said the strategists. That was the situation in 2020: retail buyers made some 31% from the March low to the June high, basically doubling the market performance, the JPMorgan said.
Retail investors were the main driver behind the market rally in the last week of April, with institutional activity subdued and low positioning by momentum-trading commodity trading advisers. Their market share reached 36% in late April, versus a year-to-date average of 21% and long-term share of 12%.
As for what that savvy bunch of traders has been up to lately, JPMorgan says a shift may be under way.
Wu and her colleagues noted that Monday marked the first time they've seen profit-taking flow — $555 million — since the market recovery, with $2 billion profits taken on options and the 'largest outflow in history' for Nvidia NVDA, to the tune of $894 million.
After Tuesday's softer-than-forecast inflation numbers, retail investors came back in, though at a slower pace.
Inflows in the latest week were entirely driven by exchange-traded funds, chiefly broad market ones such as the SPDR S&P 500 ETF Trust SPY, said Wu and colleagues. They also saw a sector rotation: value to growth, small cap to large cap, healthcare to industrials, gold and silver to base metals, while demand for international equities remained a theme.
Over the past week, investors took profits on Nvidia, Palantir PLTR and Tesla TSLA, with continued heavily selling of Apple AAPL since last July, though buying for other Magnificent 7 group names.
U.S. stocks SPX DJIA COMP have opened lower, with Treasury yields BX:TMUBMUSD30Y BX:TMUBMUSD10Y dropping. Oil prices CL00 NQ00 are down nearly 3% on rising bets of a U.S.-Iran nuclear deal.
.
Key asset performance
Last
5d
1m
YTD
1y
S&P 500
5892.58
4.64%
11.69%
0.19%
11.01%
Nasdaq Composite
19,146.81
7.94%
17.41%
-0.85%
14.36%
10-year Treasury
4.536
15.50
20.60
-4.00
15.50
Gold
3131.9
-7.14%
-6.72%
18.66%
30.94%
Oil
61.5
6.13%
-0.71%
-14.43%
-22.02%
Data: MarketWatch. Treasury yields change expressed in basis points
Fed Chairman Jerome Powell has warned that inflation could be more volatile in future.
He spoke just ahead of a big data drop that showed producer prices falling a bigger-than-forecast 0.5% and the most since the pandemic, though that won't last. April retail sales rose a scant 0.1% as expected, after a revised up 1.7% gain in May, while the latest weekly jobless claims held steady at 229,000. Due later, industrial production is scheduled for 9:15 a.m., followed by business inventories and a home builders confidence index at 10 a.m.
Consumer bellwether Walmart WMT reported forecast-beating results and maintained its full-year outlook, but warned tariffs are pressuring prices. Shares have turned lower.
China e-commerce group Alibaba BABA reported weaker-than-forecast results and shares are down.
Deere DE reported an earnings beat and share are up, but it also trimmed guidance.
UnitedHealth shares UNH are off 6% after a report of a DOJ probe.
Foot Locker FL shares are up 80% after Dick's Sporting Goods DKS said it will buy the sneaker chain in a $2.4 billion deal, confirming a Wednesday report.
Coinbase stock COIN is slipping after suffering a cyber attack after overseas workers were bribed to steal customer data.
Cisco Systems CSCO posted an earnings beat on growing AI demand for networking products.
CoreWeave CRWV is falling on disappointing guidance.
At a news conference, President Donald Trump gave the kiss of death to the idea of a U.S. sovereign wealth fund. He also said India offered to drop tariffs on the U.S. to zero.
Bags of cash from drug cartels flood teller windows at U.S. banks.
Microsoft layoffs hit coders hardest with AI costs on the rise.
As investors pile into private assets, this storied firm expects slowdown.
Gold could be setting up for a 'spectacular fall,' as the U.S.-China tariff pause and talks planned between Russia and Ukraine take war risk out of commodity prices, said Ben Emons, founder of Fed Watch Advisors, in a Substack post. His chart shows gold and the Energy Select Sector SPDR XLE both pointing lower. 'Gold has 'crashed' before, such as in 2012-13 when the Euro crisis ended, and after 2020, resulting in a drawdown of 30 to 40 percent in each case. Secondly, there is energy, with XLE and WTI stopping short of the 50-day moving average, while the broader market remains in a risk-on momentum,' he said.
These were the most active tickers on MarketWatch as of 6 a.m.:
Ticker
Security name
NVDA
Nvidia
TSLA
Tesla
UNH
UnitedHealth
GME
GameStop
PLTR
Palantir Technologies
SMCI
Super Micro Computer
AAPL
Apple
AMD
Advanced Micro Devices
AMZN
Amazon.com
TSM
Taiwan Semiconductor Manufacturing
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