Retail traders leaned on their 2025 playbook and bought the dip this week as market volatility surged. Stocks posted their worst day since October on Tuesday after President Trump threatened to take over Greenland and announced tariffs on eight European nations that opposed him. But the market rebounded on Wednesday after Trump announced a “framework” of a deal with NATO centered on U.S. strategic interests in the Danish territory. Big money turned to the “sell America” trade on Tuesday: sending U.S. equities and the dollar down, while bond yields and gold jumped. On the other hand, retail traders offered support for the stock market by continuing to buy in amid the selloff — the same strategy that helped power relentless gains in 2025, data shows. “As geopolitical developments cast fresh uncertainty over market sentiment this Tuesday, retail investors responded by stepping in strongly to buy the dip,” Arun Jain, head of U.S. equity quantitative strategy at JPMorgan, wrote to clients on Thursday. .SPX 5D mountain The S & P 500, 5-day Tuesday was the third biggest single day for retail trader buying in a year, JPMorgan said. Flows of dollars into stocks from individual investors hit $12.9 billion this week — nearly double the weekly average over the past 12 months and close to the level of buying seen in the wake of Trump unveiling higher tariffs last April, the bank found. Sustained buying momentum in the new year has pushed retail activity to new records on a rolling monthly basis, Jain added. Metals and overseas To be sure, mom-and-pop investors didn’t exactly ignore the trans-Atlantic tensions and splits within NATO. Jain said precious metal funds and international equities both saw increased attention following Trump’s latest tariff threats. Market data firm VandaTrack similarly reported a spike to unusually high buying levels from Main Street investors on Tuesday, which Vanda’s Ashwin Bhakre said suggests that individual investors are still “conditioned to buy weakness.” On top of that, he said this behavior can show small investors were “effectively front-running a potential price floor,” or buying on the expectation of a bounce. Some market participants saw this week’s action as yet another example of the “TACO” trade, short for “Trump Always Chickens Out,” and suggestive of individuals buying stocks when White House policy roils markets on the assumption that the most aggressive policies will later be walked back. “The risk-bounce on Greenland appears to vindicate investors not pushing sell-America trades harder in anticipation of a Trump reversal,” said Krishna Guha, head of global policy and central bank strategy at Evercore ISI, in a Wednesday note to clients. Retail investors in January are coming off a banner year in 2025, helped by their move to buy stocks during any market downturns. Most notably, small-scale investors bought stocks in record-setting volumes in the immediate aftermath of Trump’s announcement of steep tariffs last April — a plan that was watered down later. Everyday traders kicked off 2026 by focusing on energy stocks and energy exchange-traded funds in the wake of the U.S. strike on Venezuela , and have continued to play the surge in silver. But JPMorgan and Vanda both said more recent attention has partly shifted back to last year’s leaders — popular technology stocks such as Nvidia and Intel .
Add A Comment