New York, November 17, 2025 – Retail investors in the U.S. stock market are exhibiting signs of reduced confidence in the market’s ability to rebound, according to recent data and analyst observations. This shift suggests that the individual investor-driven momentum behind recent rallies may be weakening.

Individual investors have played a significant role in fueling market gains this year, helping the S&P 500 and Nasdaq recover from selloffs and reach record highs. However, since early November, retail participation has begun to wane, with fewer investors showing enthusiasm for buying on market dips.

Factors Behind Diminished Retail Conviction

James St. Aubin, chief investment officer at Ocean Park Asset Management, noted that while the “buy the dip” mantra remains popular on social media, investors are increasingly questioning market valuations and speculating whether sectors such as AI might be in a bubble.

The trend of active retail participation became pronounced during the COVID-19 pandemic in 2020, when quarantined investors increasingly focused on trading and portfolio management. In recent years, retail buying has acted as a buffer against market volatility, helping stabilize prices during corrections.

Data Signals from Vanda Research

Analysis from Vanda Research indicates that retail investors are showing less conviction than earlier this year, weakening one of the forces behind major market rebounds, such as the post-April “tariff tantrum” bounce.

• Late October and early November trading data showed the weakest retail buying in months.
• September marked a shift as retail investors moved from individual stocks to broad market ETFs like the SPDR S&P 500 Trust (SPY) and the Invesco QQQ Trust (QQQ).
• By last week, even ETF purchases by retail investors were scaling back, traditionally a safer avenue for cautious investors.

Institutional vs. Retail Activity

BofA Securities reported that while institutional buying of broad market ETFs remained robust, retail investors were net sellers for the first time since late September, signaling a marked moderation in enthusiasm.

Despite this, some analysts urge caution in interpreting the data. Charles Schwab’s proprietary sentiment tracker shows retail investor caution increasing slightly, but overall sentiment remains positive, according to Joe Mazzola, head of trading and derivatives strategy.

Adam Hetts, head of multi-asset investing at Janus Henderson, emphasized the importance of retail participation, stating, “Without their support, any rebound becomes more difficult.” Analysts continue to monitor trends in retail sentiment closely, as shifts in buying behavior could influence market dynamics in the near term.