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Yahoo
29-05-2025
- Business
- Yahoo
Buying the stock market dip hasn't paid off this much in 30 years
Investors have been instantly rewarded for buying the dip in 2025 with the highest return in more than 30 years. Research from Bespoke Investment Group shows that so far this year, the S&P 500 (^GSPC) has risen an average of 0.36% in the next trading session following a down day for the index. According to Bespoke's data, which dates back to 1993, the only other time stocks rebounded even close to this aggressively was the 0.32% average rise seen after down days during 2020. As Bespoke wrote on X, the data is proof that the "buy the dip" mentality has been at the forefront of the market narrative in 2025. This played out as recently as Tuesday when the S&P 500 rose more than 2% after falling 0.7% to end last week's trading before the holiday weekend. The catalyst for Tuesday's rally was President Trump dialing back tariffs he had previously threatened, a key driver of many rebound days this year. "We saw our customers buying heavily during April," Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. "They were astute. They didn't give up faith. Buy the dip has worked for them very well for the past few years, and it did work really well for them again." Read more: The latest news and updates on Trump's tariffs Since the market's most recent bottom on April 8, the S&P 500 has risen nearly 19%. Largely, retail investors have been leading the charge. Data from JPMorgan quantitative strategist Emma Wu showed retail investors have poured more than $50 billion into US equities since the April 8 low. This surpassed the $46 billion retail investors put into the market between March and June 2020. "The buy-the-dip strategy in early April has clearly paid off," Wu wrote. Similar data from VandaTrack showed the week following Trump's April 2 "Liberation Day" tariff announcement saw "record dip-buying flows from retail investors," including $3 billion in net purchases on April 3, the largest daily total since VandaTrack began collecting this data in 2014. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-05-2025
- Business
- Yahoo
Buying the stock market dip hasn't paid off this much in 30 years
Investors have been instantly rewarded for buying the dip in 2025 with the highest return in more than 30 years. Research from Bespoke Investment Group shows that so far this year, the S&P 500 (^GSPC) has risen an average of 0.36% in the next trading session following a down day for the index. According to Bespoke's data, which dates back to 1993, the only other time stocks rebounded even close to this aggressively was the 0.32% average rise seen after down days during 2020. As Bespoke wrote on X, the data is proof that the "buy the dip" mentality has been at the forefront of the market narrative in 2025. This played out as recently as Tuesday when the S&P 500 rose more than 2% after falling 0.7% to end last week's trading before the holiday weekend. The catalyst for Tuesday's rally was President Trump dialing back tariffs he had previously threatened, a key driver of many rebound days this year. "We saw our customers buying heavily during April," Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. "They were astute. They didn't give up faith. Buy the dip has worked for them very well for the past few years, and it did work really well for them again." Read more: The latest news and updates on Trump's tariffs Since the market's most recent bottom on April 8, the S&P 500 has risen nearly 19%. Largely, retail investors have been leading the charge. Data from JPMorgan quantitative strategist Emma Wu showed retail investors have poured more than $50 billion into US equities since the April 8 low. This surpassed the $46 billion retail investors put into the market between March and June 2020. "The buy-the-dip strategy in early April has clearly paid off," Wu wrote. Similar data from VandaTrack showed the week following Trump's April 2 "Liberation Day" tariff announcement saw "record dip-buying flows from retail investors," including $3 billion in net purchases on April 3, the largest daily total since VandaTrack began collecting this data in 2014. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Yahoo
16-04-2025
- Business
- Yahoo
Big banks were counting on American prosperity, but volatility works too: Morning Brief
The American growth trade as we know it — juiced by AI might, hopes of a soft landing, and coming deregulation — may have fallen away. But an outgrowth of shifting tariff policies has sparked another lucrative exchange on Wall Street: the volatility trade. A surge in trading activity has shuttled billions of dollars to the nation's largest banks as investors have attempted to protect their money or deploy it in the face of market gyrations. By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Earnings reports from the big five banks in recent days revealed they collectively raked in nearly $37 billion in trading revenue this past quarter, touting record sales from equities changing hands. Warren Buffett famously urged investors to 'be fearful when others are greedy and greedy when others are fearful.' A corollary for the financial institutions facilitating those trades is to sit back in any environment and collect fees. Wall Street wants stocks to go up, sure, but most importantly, it just wants stocks to move. The big banks' trading may mostly be for hedge funds, pensions, and large companies — big institutional investors. But everyone's rolling up their sleeves at the volatility and tinkering with their portfolios, looking to optimize or take advantage of the moment. As my colleague Josh Schafer reports, everybody's trading. Dip-buying flows following the week of 'Liberation Day' reached record levels, according to data from VandaTrack, including $3 billion in net purchases on April 3. That was the largest daily total since VandaTrack began collecting the data in 2014. Buying at recent lows and FOMO trading explained much of the heightened activity. But another interpretation is that an entire class of retail investor has been trained to throw their cash into stocks in a continuation of a pandemic-era shift in personal finance. You are probably better off not looking at your diminished 401(k) account when the market is convulsing. But pushing an order on a trading app has become something of a pastime for an increasingly large American demographic, the foundation for group chats among young people, and the basis for an entire genre of aspirational lifestyle content. That big banks' big shot clients are doing this too is a great "stars, they're just like us" moment. But it's also part and parcel of the same volatility that's been a hallmark of the 2025 stock market and a lesson in the importance of a diversified portfolio of banks' business lines. That these banks can up their profitability amid economic uncertainty and a lack of an anticipated IPO boom isn't unique to volatile trading. A similar dynamic was at play earlier this year, when a major market narrative was whether the Fed would continue to ease rates. (The Fed cut rates in September, November, and December but has since paused.) Further rate cuts would have curtailed banks' lending margins, which were supercharged by the central bank's years-long tightening campaign. But the big banks could have done just fine in a low-rate environment because they can lean on other commercial operations to cover revenue losses elsewhere. The diversified nature of financial services allows the nation's biggest banks to profit even when the outlook grows darker. It's not clear how the American exceptionalism trade will unfold in the months ahead. Tax cuts and other business-friendly deregulatory efforts are in the offing. In the meantime, as long as money is still moving and greasing the trading gears, at least one part of Wall Street will be happy. Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
Yahoo
15-04-2025
- Business
- Yahoo
Investors aggressively buy the dip as Trump's tariff turmoil continues to shake markets
The fallout from President Trump's tariff announcements and revisions hasn't yet pushed investors to shy away from an old habit: buying the dip. Data from VandaTrack showed the week following "Liberation Day" saw "record dip-buying flows from retail investors," including $3 billion in net purchases on April 3, the largest daily total since VandaTrack began collecting this data in 2014. Global markets sold off sharply in the initial reaction to Trump's reciprocal tariff announcements that pushed levies to their highest level in a century. Across trading on April 3 and 4, the S&P 500 (^GSPC) experienced one of its worst two-day stretches in history. Since this initial crash, markets have remained volatile, with the index seeing its best single-day rally since 2008 last Wednesday, April 9. Read more: The latest news and updates on Trump's tariffs "Even prior to Trump's tariff U-turn, retail investors remained well short of capitulating," the VandaTrack team wrote in a note on April 9. "The glass-half-empty interpretation is that if this rally turns out to be a mere bear market bounce, the risk of further downside remains on the cards." VandaTrack's team added that retail traders not buying the dip is a "hallmark sign of equity market bottoms," but it's not a "necessary condition for an equity trough." "At the slightest whiff of good news, people come roaring back in because that FOMO [fear of missing out] never goes away," Interactive Brokers chief strategist Steven Sosnick told Yahoo Finance last week. "It's always there. No one ever wants to miss a rally." VandaTrack's data isn't the only indication investors have been aggressive in scooping up stocks during the recent drawdown. An April 8 note from Bank of America showed the firm's clients were net buyers of $8 billion worth of stock during the week of the initial tariff announcements. This marked the fourth-largest weekly inflow in Bank of America's data going back to 2008. Data from Deutsche Bank published Monday also showed equity inflows of nearly $50 billion last week — the largest amount seen in 2025 — including $31 billion flowing into US stocks. Deutsche Bank chief strategist Bankim Chadha told Yahoo Finance the data shows "risk appetite is still alive." Chadha added that the recent flows might not be an indicator that investors are intentionally buying the dip but rather a continuation of a post-pandemic trend of consumers putting excess savings into stocks. Still, Chadha said the recent "robust inflows" show those investors haven't taken an overall negative view of the economic outlook amid the tariff turmoil. Tariff fears thus far have spiked predictions of higher inflation and slower growth, though as seen in last week's inflation reading, the data itself hasn't deteriorated yet. "If we do get bad inflation growth or labor market data, it's another issue that could potentially draw basically on performance of equity markets," Chadha said. Market sentiment surveys, however, show money managers growing increasingly cautious as tariff uncertainty persists. On Tuesday, Bank of America's latest fund manager survey showed a record number of investors intend to cut their allocation to US equities, and expectations for a recession over the next year logged their fourth-highest reading of the past two decades. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Yahoo
30-03-2025
- Business
- Yahoo
Commentary: Why are investors buying the dip in stocks?
I need to know the answer to one important question today. Why are you buying the dip in stocks? Is it because it has worked so well for you in the past five years? Is it that you have so much money invested in the markets that you aren't sure where else to put it? Is there another reason? Send me your answers on X @BrianSozzi. I'm very curious. I will begin replying after 7:30 a.m. from the parking lot of my gym after I finish working out. The cold hard data suggests that despite all of the negatives weighing on the markets (tariffs, inflated S&P 500 earnings estimates, slowing economic data — I can go on), investors continue to hit the buy button on dips. Retail investors have "significantly bulled up" of late, Vanda Track strategist Marco Iachini pointed out. This often-eager investor class has poured $32.9 billion into US markets since the S&P 500's (^GSPC) late February lows. That is in the 97th percentile of any 24-day stretch since 2014, Iachini found. Retail investors' top purchases during this period were for shares of Nvidia (NVDA), Tesla (TSLA), Palantir (PLTR), Amazon (AMZN), and AMD (AMD), in that order. Investors are showing the strongest conviction in US stocks, which runs counter to various red flags in consumer sentiment surveys. "The renewed gap between purchases of single stocks and ETFs corroborate the view that retail investors are taking a glass half-full view after a series of half puts from the Fed, macro data and Trump in recent weeks," Iachini wrote. "In particular, the rising share of purchases of Magnificent 7+ names we highlighted two weeks ago has continued to climb higher." "This shift away from broad ETFs suggests individuals see these names as either on sale or as relative safe havens despite recent underperformance," Iachini added. "Historically, increases in ETF buying coincide with growing fear across market participants. We're not there yet." Are you one of these individuals buying the dips and excited that the S&P 500 is back above its 200-day moving average (though historical data suggests you should be worried)? Let me remind you of the backdrop that I would characterize as teeming with risks to stocks. Auto tariffs are here, and more duties on other stuff are likely coming in a few weeks. Tariffs aren't some BS thing; they stand to cause real harm to companies' profits. Read more: The latest news and updates on Trump's tariffs JPMorgan auto analyst Ryan Brinkman cut estimates and price targets on Ford (F) and General Motors (GM) after the 25% tariff announcement this week, citing "increased potential for material earnings risk from draconian auto tariffs that now seem likelier than ever to be imposed as soon as April 3." Note the word "material." In the meantime, big companies Delta (DAL), FedEx (FDX), and Nike (NKE) have warned about near-term demand trends this month. And now Wall Street is out there slashing their S&P 500 price targets. The top business leaders I talk to each day are sounding more cautious about the economy. Build-A-Bear Workshop (BBW) CEO Sharon Price John told me on Yahoo Finance's Opening Bid podcast (see video above) that tariffs mean higher toy prices. Fashion designer Rebecca Minkoff told me the same thing in an episode that will drop on April 2 at 8:00 a.m. ET. Others have told me privately that the uncertainty on policy has begun to weigh on orders. In turn, that is causing them to rethink their guidance — more on that when earnings season begins in a few weeks. "Ambiguity is the No. 1 enemy of a market," former director of the National Economic Council and current IBM (IBM) vice chair Gary Cohn said on Opening Bid. "When a company creates ambiguity in their earnings profile, in their growth profile, in their business model, the market will punish that stock. When politicians, legislators create ambiguity in the way that taxes are going to work, the way that capital gains are going to work, the way that they're going impose tariffs, they create ambiguity to a market and the market as a whole reprices." But, hey, keep dip-buying. Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email Sign in to access your portfolio
