Family-owned investors rushed into two deals on Monday in the wake of the U.S. and Israeli attacks on Iran. Retail investors transferred millions of dollars on a net basis to the State Street Energy Select Sector SPDR ETF (XLE) and Palantir in the first hour of trading Monday, according to Vandatrack. But the broader market did not see the same support from smaller traders, the investment data firm found. “The message from the tape is simple and clear,” Banda analyst Ashwin Bakre told CNBC. “This was not a mass panic. It was a selective repositioning.” The moves come as deals race to prepare for a potential long-term global conflict. A military action by the United States and Israel killed Iran’s supreme leader Ayatollah Khamenei, prompting retaliatory attacks by Middle Eastern countries. US President Donald Trump said the conflict could last several weeks. Gen. Dan Cain, chairman of the Joint Chiefs of Staff, said the fighting could result in additional military deaths. Retail investors bought $14 million worth of XLE funds in the first hour of trading, an increase of more than 425% compared to the same period on Friday. The ETF rose to a 52-week high in Monday trading as oil prices rose on concerns that the conflict would limit supply. “Retailers didn’t tiptoe around energy. They acted decisively,” Bakre said. “The size of the buying compared to Friday suggests that oil has quickly become the preferred geopolitical hedge in the open.”XLE ALL Mountain These small traders also poured more than $8 million into defense technology stock Palantir in 60 minutes. This marks a “dramatic change” from the more than $500,000 net shortfall seen in the first hour of Friday’s session, Bakre said. Palantir soared more than 6% in midday trading Monday, leading gains across the defense sector. By comparison, the iShares U.S. Aerospace and Defense ETF (ITA) rose more than 2%. This stock has “rapidly restructured from a software growth name” [defense] “The speed of change is remarkable,” Bakre said. PLTR ITA 1D Mountain Palantir and ITA, 1st Selective and Defensive Other popular plays didn’t see as much of an uptick. In Monday morning trading, retail investors remained net buyers of Nvidia stock. However, in the first hour, net flows decreased by 76% compared to the most recent trading day. This is part of a trend among traders to reduce exposure to riskier technology stocks. Bakre said interest in artificial intelligence trading has “definitely diminished,” but trading in the State Street SPDR S&P 500 Trust ETF (SPY) was “heavy” but “mixed,” the analyst said. “Retailers are simply not buying the market correctly.” “They’re targeting specific themes rather than broad index exposure,” Bakre said. 2025 was a bumper year for retail traders, thanks in part to buy-on-the-moment strategies. Monday’s action shows the group is not panic selling, but is buying stocks strategically, Bakre said. Banda also pointed out that they are also taking a defensive stance. For example, iShares 0-3 month government bonds are in high demand, Bakre said. “Retail was not just rotating, it was actively hedging,” Bakre said of the bond ETF (SGOV) and ProShares UltraPro Short QQQ (SQQQ) on Monday morning.
