The first signs of capitulation among normally bullish retail traders are showing up in data at JPMorgan Chase & Co. and Fidelity Investments.
JPMorgan reported retail orders amount to net selling of $1.5 billion as of noon Friday, the most in the first 2.5 hours of trading in its history. That came a day after the firm’s figures showed individuals were net buyers of $4.7 billion of shares, the biggest day over the past decade.
At Fidelity’s brokerage unit, individual investors were still buying their favourite stocks and exchange-traded funds Friday, but the level of purchasing relative to sale orders showed a slowdown from the prior day.
Retail investors have for years been reliable buyers of any meaningful pullback in American equities. The bet this week was that the market rout triggered by U.S. President Donald Trump’s trade war would present a buying opportunity in the long run.
Those bets came up empty Friday, with the S&P 500 down more than 4% and nearly 10% in the past two days. Most of the selling came in single stocks, notably Tesla Inc. and Apple Inc., data compiled by Emma Wu, the bank’s global quantitative and derivatives strategist, show. Tesla sank almost 10% Friday, while Apple slid almost 5%.
Fidelity investors snapped up shares of Nvidia Corp. and Amazon.com Inc. amid a two-day slide that’s wiped out more than $500 billion between the two companies, according to data tracking the users of the brokerage. They also added to market-tracking ETFs like the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust in another contrarian bet.
The S&P 500 Index plunged more than 5% at one point on Friday, and the tech-heavy Nasdaq 100 was on track to close in a bear market. The slide was only rivaled in swiftness by the pandemic meltdown in 2020 and 2000’s dot-com implosion.
For some long-time market watchers, that sparked caution that individuals seeking to buy the dip are throwing good money after bad. Famed money manager Bill Gross warned on Thursday that investors “should not try to ‘catch a falling knife.‘”
Apple, Meta Platforms Inc., Microsoft Corp., and Palantir Technologies Inc were some of the most actively traded companies among Fidelity users Friday.
Individual investors have made a habit of buying into market selloffs and pouncing on big technology companies that they perceive as getting cheaper. Increasingly, the group has embraced leveraged ETFs, which can double or triple returns of companies and underlying indexes to ramp up bets on sectors.
That was the case on Friday when the Direxion Daily Semiconductors Bull 3x Shares, which seeks to deliver 300% of the performance of the NYSE Semiconductor Index, was among the most-traded assets on Fidelity’s platform. The buying outpaced the selling at greater than a three-to-one clip as the ETF slid by nearly half from Wednesday’s close.
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