Making Sense Trading Insights: Retail vs. institutional investor divergence
Sep 2, 2025
Luca Rainero, Head of Data Intelligence at JP Morgan, dives into the intriguing divide between retail and institutional investors. He discusses the bullish retail trend of buying the dip and the resurgence of meme stocks fueled by social media engagement. Luca also sheds light on how sentiment analysis tools are evolving, exploring the implications of AI in understanding market behaviors. With insights into contrasting investor sentiments and the application of large language models, this conversation highlights the future of market analytics.
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Retail Buying Drove Recent Market Gains
- Retail investors were the largest net buyers of US equities year-to-date even as institutions stayed cautious.
- Retail-led demand helped push the S&P 500 to fresh highs and lifted a popular retail basket ~30% YTD.
Flows Diverged Through The Sell-Off
- Institutional flows stayed cautious during the late-Feb to early-Apr sell-off while retail remained consistently bullish.
- March and April were record months for retail net buying despite a roughly 20% S&P sell-off earlier.
Sentiment Complements Flow Analysis
- Sentiment and flows are distinct yet both important for predicting market moves.
- Retail and institutional groups are heterogeneous, so aggregated labels mask internal variation.