Retail Investors Leave Their Mark on Top-Performing Stocks, Strategists Say
This week offers something for every type of market participant — from earnings-packed reports catering to fundamental analysts to explosive rallies in beaten-down names for the risk-seeking “YOLO” crowd.
But Wall Street strategists agree on one thing: retail investors are calling the shots right now.
Barclays’ Venu Krishna and team point to their proprietary Equity Euphoria Index, which tracks the percentage of stocks in “euphoric territory.” The index is nearing its highest level this year, fueled by options activity — especially zero-day-to-expiration contracts that have become retail traders’ weapon of choice.
This combination of surging prices and volatility, they note, is a classic sign of “upside chasing.”
Charles Schwab’s Liz Ann Sonders echoes that view. Since the April 9 “Liberation Day” tariff low, the best-performing names have been unprofitable tech firms and heavily shorted stocks — moves she says carry clear “retail investor fingerprints.”
These traders have forced institutions to adjust positions, but not fully embrace risk, leaving the “pain trade” potentially skewed higher, she said on the Excess Returns podcast.
Meanwhile, JPMorgan’s Nikolaos Panigirtzoglou highlights another support: corporate buybacks. Together with retail flows, they’ve steadied markets despite lingering tariff and policy uncertainties. As GDP and inflation data stabilize, volatility has eased — prompting volatility-control funds to boost their stock allocations from 20% earlier this year to around 55%.
In a best-case scenario, allocations could rise to 70%, though upcoming catalysts like the July 30 Fed meeting and Aug. 1 tariff deadline could reverse that trend.
Still, Sonders warns the market’s challenge isn’t just uncertainty, but instability — unpredictable shifts in policy that have frozen corporate investment and hiring, aside from AI-driven spending.
