Zhitong
2024.08.15 22:26
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Retail investors successfully bottomed out in August? Tech stocks like NVIDIA benefited

Retail investors actively bottom-fished in the US stock market in August, especially showing strong interest in technology stocks. Despite significant declines in the S&P 500 Index, the Nasdaq Composite Index, and the Dow Jones Industrial Average at the beginning of August, retail investors still demonstrated a strong buying interest. According to Vanda Research data, retail investors are more inclined towards individual stock investments, especially in semiconductor stocks like NVIDIA, despite relatively subdued interest in the SPDR S&P 500 ETF. In addition, long-term Treasury bond ETFs have also begun to attract retail investors' attention

When the US stock market falls, retail investors see buying opportunities.

According to the Wisdom Financial APP, in the first five trading days of August, the S&P 500 index fell by about 5.9%, the Nasdaq Composite Index fell by nearly 8%, and the Dow Jones Industrial Average fell by 5.1%.

This wave of decline occurred after two consecutive weeks of decline in the S&P 500 and Nasdaq. Although Wall Street seems worried about the future, retail investors remain steadfast.

Data released by Vanda Research on Wednesday showed that retail investors actively bought into the market turmoil at the beginning of August, breaking the trend of relatively flat participation in the second quarter and showing a strong desire to "buy on the dip" when stocks fall.

Vanda Research also pointed out that the second half of the year is usually a period of relatively subdued activity for retail investors, making this buying behavior even more noteworthy.

What are these retail traders buying? According to Vanda's data, retail investors tend to buy individual stocks rather than ETFs, especially showing more activity in technology stocks. This also aligns with the current trend of retail investors allocating more technology stocks in their portfolios.

Over the past month, technology stocks have been hit hard, with the "Big Seven" entering a correction phase, followed closely by the Nasdaq index. Therefore, the increase in retail trading volume further proves the existence of buying on the dip. NVIDIA (NVDA.US) and other semiconductor stocks have benefited from retail investors' buying.

At the same time, trading activity in one of the most popular market-tracking ETFs among retail investors, the SPDR S&P 500 ETF (SPY.US), has been relatively subdued. Despite a slight recovery in early August, retail net purchases of SPY remain well below levels seen in the past two years.

It is worth noting that one ETF that has started to attract the attention of retail investors is the iShares 20+ Year Treasury Bond ETF (TLT.US). This may indicate that retail investors are looking to lock in high bond yields by purchasing long-term bonds before the Fed begins to cut interest rates