Retail Investors Keep Buying the Dips—But That May Change Soon Goldman Says
The S&P 500 initially dropped as much as 1.1% on Wednesday following a hotter-than-expected consumer price index (CPI) report. However, the losses didn’t last, with the index trimming its decline to just 0.3% by the close.
According to Scott Rubner, a tactical strategist at Goldman Sachs, retail investors were the driving force behind the swift recovery.
“Retail was buying the early morning dip post-CPI,” Rubner wrote in an email to clients. “Everyone is in the pool—retail traders, 401(k) inflows, start-of-the-year allocations, and corporate buybacks.”
But he warns that this bullish momentum may not last. “This is the last bullish email I will send for Q1 2025,” he noted, citing shifting flow dynamics and approaching seasonal headwinds.
The E-Mini S&P 500 futures contract is currently hovering near its 50-day moving average, with critical support levels being tested. Rubner’s analysis suggests that commodity-trading adviser (CTA) trend followers have significantly more selling to do if markets decline than buying if they rise.
While January and February typically see the strongest inflows into 401(k) and 529 plans, this trend is expected to slow soon. Additionally, corporations are on track to repurchase a record $1.16 trillion in shares this year, but buyback activity is likely to decrease after March 16.
Retail investors have been net buyers for 22 consecutive days, with some of the largest buying days ever recorded. However, Rubner cautions that this trend may be unsustainable in the coming weeks.
