MW Retail investors are showing signs of 'persistent' fatigue as Iran risks mount, says JPMorgan

By Barbara Kollmeyer

Weekly stock buying has dropped around 30%

U.S. Air Force B-1 Lancer bombers silhouetted Thursday on a tarmac at RAF Fairford in southwest England, with retail market investors speculated to be losing nerve as the Iran conflict widens and deepens.

Retail investors who earned respect on Wall Street last year for buying the "liberation day" dip and other pullbacks have pressed pause on their stock buying as the Middle East conflict deepens.

"For the first time this year, retail investors are showing persistent signs of weakness, with weekly purchases decelerating by [approximately] 30% after defying seasonal patterns and making February their 3rd largest month on record," said a team at JPMorgan led by U.S. equity quant strategist Arun Jain, in a note on Wednesday.

Investors curbed weekly exchange-traded-fund inflows by 22% in the week from March 5 to 11, breaking with a roughly three-month streak of steady support, the JPMorgan team noted. Retail flows fell to $6.7 billion, below the 12-month weekly average of $7.1 billion, with ETFs still in favor at $6.3 billion versus $400 million funneled toward individual stocks.

The retail cohort is pulling back on ETF and single-stock purchases, says JPMorgan.

The pulling back of interest in single stocks weighed on already moderate flows seen in the past two to three weeks, according to the strategists. Monday's dramatic selloff on Wall Street marked the "largest net-selling day in single stocks in a month," said Jain and team. Those purchases resumed at a positive pace for Tuesday and Wednesday, if still below the average year-to-date level.

Stock picking among the retail crowd remained largely optimistic, however, titling toward megacap tech names such as Oracle $(ORCL)$ following its well-received earnings results. Exposure was cut to energy stocks.

AI stock purchases were funded by selling of the other 470 S&P 500 SPX companies, with Nvidia (NVDA), Broadcom $(AVGO)$, Microsoft $(MSFT)$, Tesla $(TSLA)$ and Palantir (PLTR) and some consumer-discretionary stocks on the shopping list. Also being picked up were software stocks as the S&P 500 Software Index XX:SP500.451030 has recently moved off a low from late February.

"The behavior resembles what we saw in 2022 during the [early stages of the ongoing] Ukraine-Russia conflict - an initial few weeks of buying energy stocks and ETFs, a brief turn negative, followed by a return to net buying in the case of Ukraine-Russia as the conflict unfolded," said Jain and team.

Oil prices climbed to nearly $120 a barrel last weekend against a backdrop of an increasingly unstable Middle East.

Retail investors have been picking up defensive plays such as aerospace and airlines and selling energy recently, the JPMorgan chart shows.

The United States Oil Fund USO, which tracks the price of West Texas Intermediate $(WTI)$ light sweet crude oil, has been a popular pick, the JPMorgan team said, with money coming away from the State Street Energy Select Sector SPDR ETF XLE, which tracks shares of major energy companies.

In some corners of the market, caution has been outsized. Charlie McElligott, a cross-asset strategist at Nomura, pointed out that traders of options tied to Big Tech stocks and an ETF that tracks the Nasdaq-100 appeared to be bracing for "disaster." That's creating a lopsided trade and a potential opportunity for an investor willing to make the bet.

The retail cohort has become a noteworthy segment of the investor landscape, which some date back to the 2020 pandemic, when individuals were largely stuck at home.

Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities, recently referred to retail investors as "the strongest hand in the equity market" following a record January. He said February flows, while below January's, still ranked as the fifth-largest net buying month on record and the strongest in five years.

Opinion: The next 7 days in Iran will determine if we face stagflation or a total global recession

-Barbara Kollmeyer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 12, 2026 11:11 ET (15:11 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.