According to JPMorgan, American households allocate so much money to US stocks that the overall market valuation depends on their appetite. Individual investors have become the most important holders of U.S. stocks, which own approximately 60% of the universe, the Wall Street company said. This record-level ownership creates a lockstep move between the S&P 500 price and return rate and retail flow to the market. “The higher the appetite of US households to hold stocks in their portfolios, the more expensive the stock market and the other way around,” a strategist led by Nikolaos Panigirtzoglou said in a note to clients. This correlation means that if households begin to flee the stock market, their actions can effectively lower the market valuation. It’s increasingly likely as President Donald Trump’s protectionist trade policy surprised the fear of a slowing economy, causing a three-week pull in the S&P 500, dragging it into the revised territory. There were early signs that retail investors had stopped buying dip as the stock market was sold significantly. JPMorgan noted that after the S&P 500 revision, the cohort appears to have become a rather underweight stock in the fund space. SSPX1Y Mountain S&P 500 US households held 42% of their shares total assets in the first quarter, down slightly from 43.5% in the last quarter. Popular trading platforms like Robinhood have allowed small investors to ride bull markets over the past few years, leading to an investment boom on Main Street. The S&P 500 recovered some of the losses, falling about 7% below its all-time high in February.
