MW Individual investors net bought a record $4.7 billion worth of stocks on Thursday as new tariffs pummeled markets

By Gordon Gottsegen

The buy-the-dip mentality has gotten stronger since 2022

When the stock market sees red, retail investors see a buying opportunity.

Stocks faced their worst day since 2020 on Thursday, a day after President Donald Trump announced sweeping new tariffs on almost every country. The S&P 500 SPX fell 4.8%, while the tech-heavy Nasdaq Composite COMP was down about 6%.

In response, individual investors bought stocks and ETFs at a record pace. Individuals net bought $4.7 billion worth of equities on April 3, which is the highest daily inflow over the past decade, according to data from J.P. Morgan.

Retail investors buy the dip pretty reliably whenever there's a stock-market selloff, and Thursday was no exception. But J.P. Morgan, which has been tracking investor activity for years, noted that this trend has strengthened since 2022.

The investment bank also compared the April 3 dip buying to investor behavior during March 2020, which was the last time the stock market fell at this pace. In contrast, individuals sold off their stocks on the days the market dropped in 2020. J.P. Morgan estimated a roughly 75% correlation between investor flows and market performance in 2020. And even on the days individuals bought the dip, they opted for diversified ETFs instead of single stocks.

This could point to a behavioral shift that has happened over the last few years, as investors get more comfortable buying into the market during large drawdowns.

The buying on April 3 was split pretty evenly between single stocks ($2.3 billion) and ETFs ($2.4 billion). Nvidia Corp. $(NVDA)$ saw the highest investor inflows with $913 million net buying, followed by $900 million flowing into S&P 500-tracking ETFs SPY.

This buying was the strongest around 11 a.m. Eastern time, and then tapered off over the course of the day - picking up slightly when the selloff accelerated into market close.

Meanwhile, Interactive Brokers $(IBKR)$, a popular trading platform among active retail investors, also noticed an uptick in activity on its platform after the April 2 tariff news. The brokerage - which measures the five-day moving average of client orders as opposed to volume - saw a 16% increase in clients' stock orders this week, and a 44% increase in options orders. All of the 25 most active tickers on the Interactive Brokers platform showed net buying, with that net-buying bias increasing later in the week.

"In general, our customers remain faithful to trading their favorite names, and in many cases have continued to add to their exposures despite - or maybe because of - the recent declines," Steve Sosnick, chief strategist at Interactive Brokers, told MarketWatch in an email.

J.P. Morgan estimated that retail-investor portfolios were down 12.9% year to date as of market close on April 3. That's a bigger drop than the S&P 500, which was down 8.3% as of April 3, but not as much as the Nasdaq Composite, which was down 14.3%.

It may be too early to tell whether this dip buying will work out in the favor of investors. Stocks continued their slide on April 4, with the S&P 500 falling another 4% by midday trading. It's anyone's guess as to when stocks will recover, and the investors who bought the dip may be feeling some immediate pain. Fortunately, time may be on their side.

"We often talk about individual investors having the advantage of being able to be more long-term. If you're somebody who does this for a living and your job is to to beat the S&P 500, every year you have to beat the S&P 500. If you don't, you're out of a job," Dan Egan, vice president of behavioral finance and investing at Betterment, told MarketWatch. "On the other hand, an individual investor can say, 'Now's a good time to invest and I can stick this out for the next three years.'"

Egan said that taking a more long-term approach can help portfolios endure large market drops, but it can also help investors keep their sanity. If an investor feels anxious when a single-day stock-market move hurts their portfolio, Egan suggests keeping enough cash on hand so it's not as stressful.

"When you think about investing in general, this involves doing the opposite of what feels comfortable to do. So that's having saved up enough cash where you're not anxious about it, where you can afford to [take risks]," Egan said. "Doing the opposite of what feels comfortable can sometimes be the smart thing to do."

-Gordon Gottsegen

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April 04, 2025 12:33 ET (16:33 GMT)

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