The stock market is hitting new highs, driven by insatiable demand from American retirement accounts. This trend, often referred to as the TINA trade—There Is No Alternative—demonstrates that U.S. households continue to see stocks as their best investment option. Though rising interest rates since 2022 have increased bond yields and provided alternative investment opportunities, the TINA trade remains robust.
This is particularly evident in U.S. retirement accounts like 401(k)s, where total allocations to equities reached $8.9 trillion in 2024. By 2022, 71% of 401(k) assets were allocated to stocks, up from 66% in 2013. Among younger account holders in their 20s, the average stock allocation was notably higher at 90%.
Analysts noted that retail traders have also been heavily investing in stocks, with net purchases totaling around $20 billion over the past three months.
TINA’s impact on stock investments
This retail activity, combined with strong demand from retirement accounts, creates a favorable environment for continued stock market growth.
The high demand for equities among U.S. households is a significant pillar of strength for the stock market. Strategists, led by David Kostin, indicated that this persistent household equity demand will likely sustain elevated stock valuations. However, they acknowledged that this demand is predominantly driven by the wealthiest 10% of households, who own 87% of household equities.
An even smaller segment, the top 1%, has been the primary driver of equity demand over the past 30 years. Projections for the S&P 500 expect it to reach 6,500 over the next 12 months, implying a 7% upside from current levels. The year-end price target for the S&P 500 has been lifted to 6,100, citing easing trade tensions and progress in negotiations as key factors.
Overall, the report underscores the critical role that American retirement accounts and household investments play in fueling the stock market’s impressive performance.
