Retail investors buy record amount post-Moody’s downgrade

Retail investors bought a record amount of stocks Monday morning after Moody’s downgraded the U.S. credit rating. JPMorgan’s trading desk data shows that individual investors purchased a net $4.1 billion worth of stocks from the market open through 12:30 p.m. ET. This marks the largest level ever for that time of day and a more than 11 standard deviation move. By the close of the trading session, retail investors had bought a net $5.4 billion in stocks. They were also responsible for 36% of the total trading volume on Monday, setting another record according to JPMorgan. The aggressive buying by retail investors came after Moody’s Ratings cut the United States’ sovereign credit rating from Aaa to Aa1. The ratings agency cited the growing burden of financing the federal government’s budget deficit and the rising cost of rolling over existing debt amid high interest rates as reasons for the downgrade. Despite the downgrade, the S&P 500 managed to eke out a 0.09% gain for its sixth straight winning session, thanks in large part to the record buying by retail investors.

Retail investors buy stocks aggressively

The index had slipped about 1% at its session low. This year, retail traders have been firmly committed to a “buy the dip” mentality. In April, during a period of tariff-related market turmoil, they net bought $40 billion, setting a new record for the most significant monthly inflow. This buying occurred even as Wall Street professionals expressed concerns about a potential recession and a shift away from U.S. assets due to President Donald Trump’s protectionist policies. However, the Moody’s debt downgrade put pressure on bond prices, pushing yields higher on Monday. The 30-year U.S. bond yield jumped above 5%, while the 10-year yield topped 4.5%. JPMorgan noted in a report on Tuesday that “US Equities followed a similar path from last week, where the daily lows were experienced in the pre-market, opening higher, and then seeing another leg higher after the UK/EU close. This may point to retail investors and corporate buybacks as the incremental buyers.”