The outbreak of the Iran war has disrupted the &#34;buy the dip&#34; habit of U.S. retail investors that had persisted for over a year. JPMorgan's latest retail radar report shows that the retail group is showing &#34;persistent signs of weakness,&#34; a signal that is extremely rare since the bank began tracking.
In stark contrast to the record bottom-fishing response of retail investors after the &#34;reciprocal tariffs&#34; shock in April last year, the weekly buying scale of retail investors has dropped by about 30% following the outbreak of this geopolitical conflict. Meanwhile, weekly net inflows into retail ETFs decreased by 22%, ending a stable buying trend that had lasted for three months.
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JPMorgan believes that the current market trend lacks concentrated selling (unlike the sharp drop of the S&amp;P 500 into correction territory within days in April 2025), which may lead retail investors to generally remain on the sidelines.
It is noteworthy that despite the significant contraction in overall buying power, retail investors' preference for AI and technology remains significant. This week, retail investors continued to increase their holdings in tech giants like Nvidia and Microsoft while significantly reducing their positions in energy stocks, showing a clear sector rotation logic.
<h2>Buying Impulse Cools: Overall Retail Flow Falls Below Annual Average</h2>
According to the JPMorgan report, during the week of March 5 to 11, total inflows from retail investors dropped to $6.7 billion, below the weekly average of $7.1 billion over the past 12 months.
Retail investors continue to prefer ETFs (net inflow of $6.3 billion), while interest in individual stocks has significantly shrunk, with net inflow for single stocks only at $400 million.
The decline at the individual stock level is particularly evident. Monday became the day with the largest net selling of individual stocks in nearly a month. Although net buying resumed on Tuesday and Wednesday, the pace remained below the average since the beginning of the year.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f16cf907-2f57-46a0-bb5f-ea9ba6986e0d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f16cf907-2f57-46a0-bb5f-ea9ba6986e0d.png"/>
<h2>Clear Rotation: Selling Energy, Betting on AI Technology</h2>
Despite an overall reduction in positions, retail investors' stock selection direction is relatively clear. This week, retail investors continued to buy technology stocks and discretionary consumer sectors, including Nvidia (+$399 million), Broadcom (+$178 million), Oracle (+$172 million), Microsoft (+$154 million), as well as Tesla (+$85 million) and PLTR.
Within the &#34;Mag 7&#34; components, retail investors sold Amazon (-$32 million), Apple (-$52 million), and Google (-$83 million).
The energy sector became the largest source of capital outflow this week, with net selling reaching $325 million, and ExxonMobil ranked second among individual stocks with net selling (-$62 million).
JPMorgan pointed out that this round of retail behavior is quite similar to the early stages of the Russia-Ukraine conflict in 2022, when retail investors also experienced several weeks of buying energy stocks, briefly turning to net selling, and then returning to net buying as the conflict situation became clearer
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In addition, retail investors net sold sectors such as finance (-$214 million), healthcare (-$208 million), communication (-$126 million), and materials (-$100 million). Meanwhile, after a rebound, retail investors continued to maintain the momentum of previous low-position purchases in the software sector.
JP Morgan's report shows that the funding source logic for retail investors is quite consistent: by selling non-AI-related stocks to provide ammunition for continued increases in AI-related positions.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/15551cee-9282-40de-ab51-9c23cf4fe87e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/15551cee-9282-40de-ab51-9c23cf4fe87e.png"/>
<h2>Energy Options Movement: Funds Shift from XLE to USO</h2>
Although retail investors overall adopted a reduction attitude towards energy stocks, the options market showed structural differentiation.
Within the energy ETF, funds clearly flowed out of XLE (Energy Select Sector ETF)—on Tuesday, XLE recorded an unusually large outflow (-5.5 standard deviations)—and flowed into USO (United States Oil Fund), which attracted a record inflow of funds this week (+9.1 standard deviations).
At the same time, USO options trading volume surged over four times the daily average, indicating that retail investors are making directional bets on crude oil price movements through derivative tools. JP Morgan data also shows that the relative activity of bullish options in the energy sector has significantly increased in this period's options market.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5d3a6c62-6a1b-4c40-b0c5-eed20a55f45a.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5d3a6c62-6a1b-4c40-b0c5-eed20a55f45a.png"/>
<h2>ETF Flows: Fixed Income and International Stocks Gained Increases</h2>
At the ETF level, the most concentrated direction of funds this week remains broad-based stock ETFs (+$2.3 billion), but other sub-sectors also received funding attention:
Diversified fixed income ETFs saw inflows of $347 million, ultra-short-term fixed income ETFs saw inflows of $212 million, international stock ETFs saw inflows of $242 million, and dividend style ETFs saw inflows of $211 million.
The increase in fixed income and low volatility ETFs somewhat confirms the current defensive orientation of retail investors in an uncertain environment.

CHAT

According to JP Morgan, from March 5 to 11, the weekly buying scale of retail investors plummeted by about 30%, with weekly net inflows into retail ETFs decreasing by 22%, and individual stock purchases significantly shrinking. In terms of direction, retail investors continued to increase their positions in AI-related assets while selling off sectors such as energy, finance, and healthcare. At the same time, trading volume in crude oil options surged, and fixed income and low volatility ETFs saw increased purchases from retail investors

- The recent outbreak of war in Iran has disrupted the "buy-the-dip" behavior of U.S. retail investors, with a notable decline in weekly purchases by about 30%.  
- Despite a significant reduction in overall buying power, retail investors continue to show a preference for AI and technology stocks, increasing their holdings in major companies like NVIDIA and Microsoft while reducing investments in energy stocks.  
- Overall, during the week of March 5 to 11, total retail inflows dropped to $6.7 billion, below the 12-month weekly average of $7.1 billion, indicating a shift in investment strategy amidst market volatility.

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The end of the US-Iran war: "Buy the dip" - American retail investors stop "bottom fishing" for the first time in over a year!