MW A $500 billion wall of money will lift the stock market in the second half, says JPMorgan
By Barbara Kollmeyer
'Boycotting' of U.S. equities by foreign buyers won't last
Retail investors have been a driving force for markets this year.
That cohort is going to keep driving the market higher, says our call of the day from JPMorgan, which predicts that retail investors will lead a $500 billion wall of money flowing into U.S. stocks in the latter half of this year, driving gains of up to 10%.
A team of strategists led by Nikolaos Panigirtzoglou estimate $360 billion of retail equity fund buying is left to come this year from an expected $630 billion total.
Those investors took profits in May and June after they heavily bought the dip in March and April.
In other words, the pause in retail buying this year has been about cashing in on gains following a V-shaped recovery for U.S. stocks, rather than a behavioral shift. "Instead, we believe that retail investors will resume their equity buying and start propagating the equity market from July onward," they said.
As for other potential buyers, the strategists said hedge funds built up more bullish exposure after reducing risk earlier in the year, and are unlikely to buy much more. Equity funds using computerized or quantitative models to take positions in individual stocks, reduced some exposure in May and June and could increase that later in the year, said JPMorgan.
Pension funds and insurance companies that been steady sellers of stocks in a push toward fixed income, are likely to continue that in 2025, with net selling of around $360 billion this year, they said.
There is one other surprising cohort that Panigirtzoglou and his team see shoring up U.S. stock buying - foreign investors. Balance of payments data and flow indicators offer an overall picture of a so-called buyers strike since February.
"We believe this 'boycotting' of U.S. equities by foreign investors is not sustainable as investors cannot avoid the biggest and most important growth segment of global equity markets, which is the S&P 500 SPX or Mag7 [Magnificent 7]," they said.
Before that buyers' strike can end though, the U.S. dollar may need to stabilize, as fear of further weakness by the greenback has been keeping those investors out of U.S. stocks, said the JPMorgan team.
That dollar stabilization could be forming, as they note the ICE Dollar Index DXY, which measures the dollar against other major currencies, is hovering near an end-April low of around 98. If that stabilizes, that could lead to another $50 billion to $100 billion of buying, they say.
Led by retail investors that means flows of nearly $500 billion in U.S. stocks for the rest of this year, enough to drive another 5% to 10% gain into the year end, they said.
Also read: The dollar is having its worst year since Nixon. Three reasons it will get even weaker.
The markets
U.S. stock futures (YM00) (ES00) (NQ00) are lower, Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y are flat and gold (GC00) is higher. Bitcoin (BTCUSD) is hovering just under a record high at $111,205.
Key asset performance Last 5d 1m YTD 1y S&P 500 6263.26 0.58% 4.00% 6.49% 11.17% Nasdaq Composite 20,611.34 1.07% 5.07% 6.73% 10.53% 10-year Treasury 4.342 -0.90 -2.60 -23.40 12.50 Gold 3332.5 -0.10% -2.17% 26.26% 37.66% Oil 68.42 1.86% -0.64% -4.80% -17.41% Data: MarketWatch. Treasury yields change expressed in basis points
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-Barbara Kollmeyer
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July 10, 2025 06:53 ET (10:53 GMT)
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