The Most Resilient Bulls "Can't Hold On" Anymore? Retail Investors' "First Sell-Off" of US Stocks Since End of 2023

Retail investors in the United States—once the most reliable buying force during dips in the stock market over the past few years—are sending warning signals to the market.

According to data from Vanda Research cited by Bloomberg, retail investors recorded their first single-day net sell-off since November 2023 this Monday, selling approximately $20.6 million worth of individual stocks.

Meanwhile, the Citadel Securities indicator measuring retail risk appetite has fallen sharply from its February high, indicating that individual investors’ confidence in the stock market outlook is waning. Although retail investors returned to buying on Tuesday, this signal’s timing is quite sensitive—since the S&P 500 has already declined nearly 5% this month.

The cooling of retail buying adds an extra layer of concern to the market. During the past three years of a bull market, retail investors’ purchasing power played a stabilizing role amid each wave of volatility. Now, as this force begins to weaken, its impact on the already pressured U.S. stock market cannot be underestimated.

First Net Sell-Off, Significance Greater Than Scale

Vanda Research data shows that retail investors net sold about $20.6 million of stocks on Monday, marking their first single-day net sell since November 2023. This shift occurred against the backdrop of a rebound in the S&P 500 that day—when threats of Trump bombing Iran’s energy infrastructure eased, briefly boosting market sentiment.

Although retail investors turned back to net buying on Tuesday, with total purchases of about $262.3 million by 12:50 p.m. Eastern Time, this brief “turnaround” already carries signaling significance. Vanda macro strategist Ruta Prieskienyte wrote in a report Tuesday: “Since early March, retail participation has been gradually retreating, while systemic deleveraging continues, and the buying from longs and hedge funds remains modest.”

Beyond the net sell data, broader sentiment indicators also point to waning retail confidence. The Citadel Securities indicator tracking retail risk appetite has dropped significantly from its February high, indicating that individual investors’ optimism about the stock market is systematically shrinking.

Vanda Research notes that the ongoing tension in the Middle East is an important backdrop for the continued weakening of retail demand. As geopolitical uncertainties weigh on market sentiment, retail investors’ willingness to buy on dips has noticeably diminished—contrasting sharply with their previous pattern of actively entering the market during pullbacks.

The marginal change in retail strength is noteworthy because this group’s influence on Wall Street has grown substantially. According to JPMorgan data, individual investors set a record for net inflows in 2025, nearly doubling the average of the past five years, surpassing the previous high in 2021 by 17%, and up nearly 60% from 2024 levels.

It is this sustained and large-scale buying force that has provided crucial support during the market’s multiple shocks over the past three years of the bull run. Now, as signs of waning retail enthusiasm emerge, investors need to reassess whether the market can continue to benefit from this buffer during periods of volatility.

Risk Warning and Disclaimer

Market risks are present; invest cautiously. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein are suitable for their particular circumstances. Invest at your own risk.