US Retail Investors Closed Their Wallets... Stock Purchase Volume Down 60% Compared to Early Year

WSJ "Tech Stock Weakness and Increased Outdoor Activities Due to Economic Reopening Are the Causes"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The volume of stock purchases by individual investors in the United States has significantly decreased compared to the beginning of the year. As the recent correction trend centered on U.S. tech stocks has led to poor returns, analysts suggest that the stock frenzy among American retail investors has taken a breather.

According to the Wall Street Journal (WSJ) on the 4th (local time), the net stock purchases by U.S. individual investors decreased by 60% compared to the start of the year as of the end of March. The number of visitors to Robinhood, a stock trading platform mainly used by individual investors, also dropped by 63%.

This contrasts with the GameStop incident in January. The WSJ reported, "At that time, millions of individual investors flocked to the platforms, causing securities platforms' servers to crash," and added, "The recent cooling of individual investors' enthusiasm for stock purchases is quite different from the situation a few months ago."

Experts analyze that the decline in the stock frenzy among U.S. retail investors is due to the overall correction trend in the U.S. stock market. In particular, concerns about inflation following economic recovery after the COVID-19 pandemic have led to a notable weakness in growth stocks. The Nasdaq index fell about 7% from its peak on February 12 to the end of last month, and major IT stocks such as Tesla and Apple dropped approximately 24% and 14%, respectively, compared to January this year.

Viraj Patel, senior analyst at Bandari Research, said, "At present, it is difficult to expect returns of more than 5%," adding, "Investors' motivation to buy stocks is inevitably weak. Investors have practically entered a dormant state."

As the COVID-19 pandemic subsides, a tendency to spend rather than invest in stocks is also pointed out as a cause. The WSJ explained, "Since last year, most outdoor activities have been halted, leading to an increase in household savings rates," and "This accumulated desire for consumption has led people to engage more in outdoor activities and product consumption rather than stock investment."

This content was produced with the assistance of AI translation services.