Retailers maintain their faith during the stormy January on Wall Street

Retail investors turned to this year’s market movement, pumping money into US stocks, although stock prices fell from historic highs recorded in early January.

Retail investors were net buyers of US stocks and exchange-traded funds every day for trading this month, according to VandaTrack. The scale of daily flows was above the 2021 average for all but two days since the beginning of the year.

Tributaries came even as Wall Street’s S&P 500 fell 9.7 percent from a record high in early January. High-ranking customers, preferred by amateur dealers such as electric car maker Tesla, are doing even worse.

The large influx of money from amateur traders was a major driver of rising stock prices last year, according to analysts who warned that the flight of retail investors could create problems for wider markets.

The influence of daily traders was on display on Monday as markets left the gate before a fierce rebound. Retail investors sold strongly in the morning, with net sales of $ 1.5 billion by noon, more than 20 percent of net sales for the entire market, according to JPMorgan Chase.

Bar chart of net daily flows of US stocks and ETFs, showing that retail investors continue to buy US stocks despite sales

However, retailers quickly bought the decline, buying $ 1.3 billion in stocks in the 3.5 hours before markets closed – a staggering wave of purchases, analysts said, given the volatility of the day. However, other market participants such as institutional investors and trend-following funds played a larger role in the fluctuation during the day, with total net purchases amounting to $ 10 billion, according to JPMorgan.

Retail buying on Wednesday – another tumultuous day for markets – focused on large technology companies and ETFs, according to Vanda analysts.

“Customers still seem to have faith in the technology sector,” said David Jones, chief market strategist at trading platform More than 70% of Nasdaq’s open position retailers are betting on a high technology index to rise, he added.

Although retail demand is holding back, there are signs of a retreat from the top of excessive risk-taking last year, pushing investors to highly volatile stocks.

Ben Onatibia, a senior strategist at Vanda, said retail investors were reluctant to buy a drop in “stock market risk pockets”, noting a lack of demand for stocks and meme companies in Cathie Wood’s Ark Innovation portfolio. which is down 27 percent this year.

Cryptocurrency markets, which also benefited from an influx of retailers willing to bet on high-risk tokens, collapsed along with stocks. “The recent weakness of crypto markets, to the extent driven by retail investors, is also in line with declining risk appetite among retail investors,” Nikolaos Panigirzoglu, a cross-asset analyst at JPMorgan, said in a note last week.

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