Passive investors need to send a thank you note to retail traders for helping to repair the damage to the stock market after a rough start in April. Emma Wu, a global quantitative and derivatives strategist at JPMorgan, said in a note to clients late Wednesday that retail stock buying boomed last month, even as Wall Street pros worried about a recession and a shift away from U.S. assets. “Retail traders net bought $40B in April, surpassing [March] and setting a new record for the largest monthly inflow. … Historically, retail investors bought aggressively daily imbalances exceeding > $4B on both April 3, when the market experienced its first > 5% drawdown since 2020, and April 9, which saw the largest one-day gain since 2008,” the note said. The strong retail buying has even caught the attention of policymakers. Treasury Secretary Scott Bessent said Tuesday that ” individual investors trust President Trump .” More evidence of the retail trading surge came from strong first-quarter results at Robinhood , which reported a 77% jump in year-over-year, transaction-based revenue. The brokerage stock was set to open sharply higher Thursday. “Retail is not just back. It is lapping up all the tariff volatility,” Bernstein analyst Gautam Chhugani said in a note reacting to Robinhood’s quarter. The purchases by individual traders shows that the “buy the dip” mentality seems well-anchored on Main Street. Yet, many of those same traders are likely sitting on losses from the past volatile month, according to JPMorgan. The next test could come from seeing if they stay the course during a more protracted downturn for the market and the economy. “We estimate retail investors lost 2% in April vs. -1% in S & P. YTD, their portfolio [lost] ~9%, nearly double the market’s drawdown,” Wu said. — CNBC’s Michael Bloom contributed reporting.
