Retail investors sold U.S. stocks on Thursday at a pace not seen since the start of the COVID-19 pandemic, breaking with their typical habit of “buying the dip” on down market days.
Ordinary investors sold a net $257 million worth of individual U.S. stocks on Thursday, according to Vanda Research, the fifth largest wave of net selling in a single day since March 17, 2020, when retail investors withdrew $502 million from individual stocks.
“This is what we would call a complete capitulation of retail investors,” Viraj Patel, global macro strategist at Vanda Research, said in emailed comments.
U.S. stocks plunged Thursday as AI and microchip stocks sold off, erasing gains from Wednesday’s post-election rally. The Nasdaq Composite, with a strong technological component (^IXIC) fell 5.2%, putting the index on track to close in correction.
The retail sale marks something of a departure from the trend of individual investors in recent years snapping up stocks when markets crash. Vanda said there were “no signs of buying the dip” in individual stocks, although some investors continued to buy leveraged exchange-traded funds such as ProShares UltraPro QQQ (TQQQ) and Direxion Daily Semiconductor Bull 3X Shares (SOXL).
Vanda added that net sales were a third higher on Thursday afternoon before late-session retail buyers stepped in.
Patel added that the pullback echoed a broader “buyers’ strike” among institutional investors, alongside sales forced by systematic and leveraged investment strategies.
Story updated with data from Vanda Research.
Follow David Hollerith on X @DsHollers.
Gn bussni
