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With the S&P 500 recently falling to a 10% correction, individual investors whose assets are more tied to the stock market than ever before have given up on their proven Dip Buying Mentality.
Retail outflows from US stocks have risen to around $4 billion over the past two weeks as tariff disruptions and rising economic concerns have led to a three-week pullback on the S&P 500, according to data from Barclays. During the sale in March, 401(k) holders are actively trading investments four times the average level, according to Solutions data dating back to the late 1990s.
“If people are trying to buy dips and sell stock, they may see people actually buy large caps, but instead they see people sell from big cap equity,” said Rob Austin, research director at Alight Solutions. “So this looks a bit like a reactionary trading activity.”
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The increase in sales has come as American households are more sensitive than ever to stock market turbulence. Federal Reserve data shows that household ownership in the United States has reached record levels, representing almost half of financial assets.
Dip-Buying has been contributing to investors over the past two years as Main Street hit highs on an artificial intelligence-inspired bull market. At one point, the S&P 500 was over 370 days without a 2.1% sale.
However, the market has started to get sour recently as President Donald Trump’s aggressive tariffs and sudden changes in policy have stimulated volatility, causing a decline in consumer spending, slow economic growth, slow profits, and even fears of a recession. The S&P 500 was officially revised late last week, and is now 8.7% below its February history high.
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Still, retailers don’t throw towels. For example, net debits for margin accounts, “representatives popular with retail investors’ feelings,” and “representatives popular with retail investors’ feelings,” continue to rise, according to Barclays data.
“There’s a lot of room for retail investors to move further away from the stock market,” an analyst led by Venu Krishna, head of Barclays for US equity strategy, said in a note to clients on Tuesday. “We believe that retail investors have never surrendered.”
Barclays’ unique indicators of happiness show that emotions were knocked down to similar levels as they were in the US presidential election in November, but they are still high by historical standards.
“I’m not saying that everyone is falling the sky. Most people don’t seem to have any kind of reaction,” Austin said.
