American retailers are becoming bearish and not available on the new selloff

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American retailers are becoming bearish and not available on the new selloff

“Retail buying impulse showed signs of slowing before this latest burst of selling,” JPM strategist Peng Cheng said.

The benchmark S&P 500 is within 2% of confirming a bear market for the first since the pandemic-led crash in March 2020 as the end of easy money pushes investors out of riskier bets.

As of Wednesday market close, U.S. retail traders accounted for about 12% of the total volume of shares traded compared to around 20% at the peak in January 2021, JPM said.

Retail investor presence in equity markets too have dwindled compared to early last year when aided by fat stimulus checks and low trading fees, they flocked to online message boards to move markets while staying locked up in their homes.

Story Highlights

  • Individual U.S. investors are turning bearish and remaining from purchasing the plunge this week, data showed, a sharp inversion from the furious exchanging during the peak of the pandemic. Throughout the course of recent days, retail dealers sold $1.9 billion worth of shares, making it the biggest two-day outflow in 14 months, as indicated by business JPMorgan. It was not so until last week when they were net purchasers of equities, notching the highest level ever recorded on May 5, according to Vanda Research.

  • Rising borrowing costs, high inflation and the possibility of slowing growth have intensified market volatility this week.

The average retail investor has also underperformed the S&P 500, making just about 6% since January 2020 compared to the 24% return of the benchmark index, JP Morgan estimated.

Retail buying is slowing, said Marco Iachini, senior vice-president at Vanda in a client note, but it could be “fatigue rather than outright capitulation” on their part.