According to the latest research report from JPMorgan Chase (JPM), as U.S. equities entered October, retail investor trading sentiment began to improve, with capital flowing back into the technology sector, especially stocks related to artificial intelligence (AI), semiconductors, and memory chips. Although rising Treasury yields, geopolitical risks, and oil price volatility continue to keep the market cautious, retail fund flows have already shown signs of recovery.

NVIDIA (NVDA) became the most favored individual stock among retail investors last week, with net buying reaching $834 million. Syndax Pharmaceuticals (SNDX) and Micron Technology (MU) also ranked among the top buy list. JPMorgan noted that historically, retail investor trading activity is typically most active in the first quarter of each year, while the third quarter is relatively sluggish. As September ended, seasonal capital outflow pressure appears to be fading. Recently, retail fund inflows have rebounded from September lows, and trading activity has gradually recovered to near the average level of the past 12 months. However, overall inflow levels remain slightly below the historical average.

The report showed that during the week of October 1 to 7, U.S. retail investors net bought a total of $5.7 billion in stocks and ETFs, below the past 12-month weekly average of $6.7 billion. Among them, ETFs saw net inflows of $4.7 billion, while individual stocks saw net inflows of $1 billion, indicating that retail investors still prefer to participate in the market through ETFs.

Technology stocks have once again become the focus of retail fund chasing. JPMorgan data showed that the activity of fund inflows into technology sector ETFs has risen to the 73rd percentile of the historical distribution, compared with only the 4th percentile four weeks ago, reflecting a clear recovery in retail investors' interest in the technology sector. This round of capital return is not only concentrated in the "Magnificent Seven" but has also spread to other technology companies. Semiconductor and hardware sectors continue to attract capital, and software stocks have also seen net buying again, indicating that retail optimism toward the technology industry is expanding.

Specifically, NVIDIA received approximately $834 million in retail net buying last week, ranking first among all individual stocks. Google parent company Alphabet (GOOGL) ranked second with $265 million, Syndax Pharmaceuticals ranked third with $150 million, Micron Technology ranked fourth with $135 million, and Seagate Technology (STX) ranked fifth with $129 million. Other large technology stocks also received capital inflows. Tesla (TSLA) received approximately $122 million in net buying last week, Amazon (AMZN) received $81 million, and Microsoft (MSFT) received $34 million. In contrast, Apple (AAPL) saw approximately $15 million in net selling.

It is worth noting that although SpaceX (SPCX) stock price rose about 15% last week, retail investors continued to reduce their holdings, with net selling reaching $177 million, making it the most heavily sold individual stock of the week. JPMorgan pointed out that after SpaceX went public, it attracted retail investors to build large positions. The recent stock price increase prompted some investors to take profits, though the pace of reduction has slowed somewhat since entering October. SpaceX's market attention has continued to heat up recently. In addition to progress in Starship test flights and Starlink satellite deployment, market news also said the company is seeking to raise approximately $40 billion to purchase NVIDIA chips to expand its AI systems. Musk previously stated that the number of NVIDIA chips used in Colossus 2 could double by the end of the year.

Besides SpaceX, Intel (INTC) saw approximately $148 million in retail net selling last week, and Marvell Technology (MRVL), Super Micro Computer (SMCI), and Moderna (MRNA) were also among the five stocks with the largest net selling.

From a sector perspective, retail preference for technology stocks stands in sharp contrast to other sectors. Apart from the technology sector receiving approximately $602 million in net inflows and the industrial sector receiving approximately $143 million in net inflows, other major sectors generally saw net selling. Among them, the communication services sector saw net outflows of approximately $231 million, the financial sector saw net outflows of $184 million, and the healthcare sector saw net outflows of $153 million.

Meanwhile, retail interest in financial stocks remains limited. JPMorgan noted that although large banks have recently underperformed, and as the market raises expectations for Federal Reserve rate hikes, the outlook for bank net interest income has improved, and trading business revenue may remain strong, retail investors have not yet clearly bought financial stocks on the dip.

As the third-quarter earnings season is about to begin, corporate earnings performance may become the next key factor influencing retail fund flows. Market consensus cited in the JPMorgan report shows that third-quarter corporate earnings are expected to grow 31% year-over-year, or 27% excluding the energy sector; revenue is expected to grow 12% year-over-year, or 11% excluding the energy sector. The report noted that earnings growth is expected to improve across all sectors compared with the same period last year, with energy and technology sectors expected to lead, while the consumer staples sector is expected to lag relatively. However, full-year 2026 earnings expectations have been continuously downgraded since early September, meaning the market still needs to watch whether corporate performance can deliver on the relatively high growth expectations.

JPMorgan believes that as the third-quarter earnings season approaches, retail capital returning to technology stocks, the recovery in ETF trading activity, and strong U.S. economic growth momentum all provide some support for market sentiment. However, Treasury yields, oil prices, and geopolitical tensions may still affect investors' risk appetite, and whether the technology sector can sustain its capital inflow trend will depend on upcoming corporate earnings and changes in the macroeconomic environment.