Fearless of the pullback! JP Morgan: Retail investors will continue to buy on dips, supporting U.S. stocks to rise until the end of the year
The JP Morgan strategist team pointed out in their latest research report that based on seasonal patterns, the strong capital inflow from retail investors in the US stock market is expected to support the market until the end of the year. Data shows that in the past two months, capital inflow into stock ETFs has reached a new high since the election, while the S&P 500 index has recorded six consecutive months of gains. Despite recent market fluctuations, Wall Street analysts believe that any pullback may be temporary and provides investors with a buying opportunity on dips
JP Morgan strategists expect that strong inflows from retail investors will support U.S. stocks, with this momentum likely to continue until the end of the year.
According to media reports, the JP Morgan strategist team led by Nikolaos Panigirtzoglou pointed out in their latest research report that based on seasonal patterns observed in the past decade of stock fund flows, they found that, except for U.S. election years, the average inflow in December and the first quarter of the following year tends to be stronger. In September and October of this year, the strong demand from retail investors for stock assets has been reflected in the inflow data through tools like ETFs.
Panigirtzoglou and his colleagues wrote in the report:
"From a seasonal perspective, the strong momentum of retail investor enthusiasm for stock investments over the past two months is likely to continue into early 2026."
ETF Inflows Reach New Highs Post-Election, S&P 500 Rises for Six Consecutive Months
The team stated that stock ETFs recorded inflows of approximately $160 billion in September and October, marking the strongest buying pace since the U.S. election ended in November and December 2024. This scale of inflow reflects the continued confidence of retail investors in the stock market.
Meanwhile, the S&P 500 index has just achieved its sixth consecutive month of gains, setting the longest winning streak since August 2021, with a cumulative increase of nearly 6% in September and October. So far this year, the index has set 36 closing highs, primarily driven by the rise in stock prices of major tech giants fueled by the AI boom.
Short-Term Adjustments Hard to Hinder Long-Term Trends
Although the recent rally in global stock markets has slowed—partly due to profit-taking triggered by overvalued tech stocks—retail-favored AI concept stocks and cryptocurrencies have also seen adjustments. However, Wall Street analysts generally believe that such pullbacks are merely short-term phenomena.
Goldman Sachs partner Richard Privorotsky pointed out that the decline in crypto assets and the pressure on the stock prices of unprofitable tech companies are reasonable manifestations of internal capital rotation in the stock market. He stated:
"Retail investors are experiencing their first test in a long time."
Privorotsky further emphasized that under the backdrop of fiscal expansion, robust corporate profits, and ample money supply, physical assets remain an important choice for wealth holding. Additionally, the U.S. government shutdown and conflicting statements from Federal Reserve officials regarding the path of interest rate cuts have also weighed on market sentiment
