Retail investors mocked as 'dumb money' by Wall Street, US stock market sees record 'buy' spree

▲ US stock market, Russell Index, Dow Jones, Nasdaq, S&P 500/AI generated image

The assessment that retail investors are a fringe force on Wall Street is now an outdated statement that no longer explains the market. In the US stock market, retail investor trading has hit an all-time high, emerging as a structural buying force that absorbs stock price declines.

According to the US economic media MarketWatch on July 1 (local time), Scott Rubner, Head of Equities and Equity Derivatives Strategy at Citadel Securities, stated that retail investor trading activity in May and June set new monthly records. During this period, retail investor trading was 65% higher than 2025 levels and more than double the 2024 average.

The day with the highest retail investor trading ever was June 12, when SpaceX (SPCX) was listed. Nine out of the top 10 retail trading days were concentrated in the past two months, with seven of them occurring in June. While Wall Street has long mocked retail investors as 'dumb money,' recent trends show that retail investors have become a key force driving market prices.

Rubner stated, "Retail investor participation has evolved from a cyclical phenomenon to a structural feature of modern markets, providing sustained demand across US equities." Citadel processes approximately 35% of US retail investor order flow. Rubner explained that this data serves as evidence of the growing influence of retail investors.

Retail investors' tendency to buy on dips has also strengthened. According to Citadel data, retail investors' buying activity during market downturns over the past six months reached its highest level since data collection began. On days when the S&P 500 Index (SPX) declined, retail investors bought 3.5 times more shares than on an average trading day. Even on days when the index rose, they purchased 1.5 times more shares than average.

Retail investors' presence has also grown in the options market. In June, the average daily volume of options premium traded by retail investors on Citadel's platform was recorded at $6.8 billion. This is 17% higher than the previous record in May, 65% higher than the 2025 average, and more than double the historical average. Notably, semiconductor options premium trading in June averaged $1.9 billion per day, six times the historical average, with approximately 75% of trades concentrated in call options.

Retail investor funds are shifting away from past meme-stock-centric speculation towards sectors and themes that are driving market growth. Assets in leveraged exchange-traded funds (ETFs) also swelled to an all-time high in 2026. The Q2 stock market rally is underpinned by aggressive buying and leverage demand from retail investors, who, once mocked by Wall Street, have now established themselves as a substantial buying base supporting market downturns.

[Article Summary]

-US retail investor trading activity reached an all-time monthly high in May and June.

-On days when the S&P 500 Index declined, retail investors purchased 3.5 times more shares than average.

-Retail investor funds, expanded into options and leveraged ETFs, emerged as a key factor supporting the Q2 stock market rally.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*