Retail Investors Boost Trading Activity Despite Market Volatility

Retail activity in the U.S. stock market is on the rise, with net buying of ETFs and stocks increasing. This trend indicates a growing market resilience among individual investors, despite the recent tariff-driven sell-offs impacting their wealth.

Date: 16-05-2025

AI Rating: 7

Growing Retail Engagement
As highlighted in the report, U.S. retail trading has witnessed significant growth driven primarily by app-based trading platforms that have democratized access to the markets. Retail investors have shown resilience, increasing their activity levels even amidst recent market volatility, indicated by net buying patterns in both ETFs and individual stocks.

Trading Trends
Specifically, retail investors have consistently net-purchased ETFs, maintaining this trend since 2019. This consistent buying behavior indicates a strong belief in the long-term potential of these funds, despite short-term fluctuations in market sentiment due to external factors such as tariff announcements.

Increased Gross Trading Activity
Gross trading by retail has also surged, with the value of company stock trading currently outweighing ETF trading by a significant margin. This increase suggests that retail investors are becoming more engaged and confident in their investment choices, likely driven by a desire to capitalize on perceived market opportunities.

Market Liquidity and Volatility
While retail trading accounts for less than 4% of the total trading value, their market presence remains notable. As retail investors adapt to market conditions, their contributions to overall market liquidity become increasingly meaningful, although they still represent a small fraction of total market activity compared to institutional investors.

Potential Impact on Stock Prices
The current trend of increased retail investment could lead to upward pressure on stock prices. If retail investors continue to engage with the market even in the face of volatility, their increased participation could serve as a stabilizing factor and potentially foster positive momentum in stock prices, particularly for companies that are heavily traded by retail investors.

Stocks: SPY IVV VOO