The army of retail investors returns to the market! JPMorgan: U.S. stocks likely to continue rising in Q2
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The return of retail investors is becoming a potential driver for a new round of gains in the U.S. stock market. JPMorgan strategists expect that the share of retail trading, which fell to a four-year low in the first quarter of this year, is likely to rebound strongly in the second quarter, injecting fresh momentum into the overall market.
JPMorgan’s strategist team stated in their latest research report that the proportion of retail investors in U.S. stock trading further declined to 17% in the first quarter, but is expected to rebound in the second quarter, with a trend highly similar to Q2 of 2025. Meanwhile, the options market has already sent signals — the volume of call options bought by small options traders shrank continuously from October 2025 to March 2026, but surged sharply in April and May this year.
This trend’s significance to the market cannot be ignored. The S&P 500 index showed highly similar patterns in both 2025 and 2026 — flat returns in the first quarter, followed by a strong rebound in the second quarter, and ultimately handsome returns for U.S. investors in the second half of 2025. If retail trading activity recovers as expected, it could provide additional upward momentum to the current market.
Retail Share Falls to Four-Year Low, Options Market Warms Up First
JPMorgan’s strategist team led by Nikolaos Panigirtzoglou noted that the share of retail investors in U.S. stock trading dropped to 17% in the first quarter of this year, the lowest level in nearly four years.
Nevertheless, the team emphasized that even during the downturn from the second half of 2025 to the first quarter of 2026, retail investors still contributed close to 20% of U.S. stock trading volume, as well as nearly 50% of zero-day-to-expiry options (0DTE) trading volume, remaining a force that cannot be overlooked in the market.
Recent developments in the options market are seen as a leading indicator of improving retail sentiment. The volume of call options bought by small options traders saw a sharp rebound in April and May this year after around half a year of dormancy, which highly corresponds to signals seen before the active entry of retail investors in Q2 of 2025.
Appetite for Individual Stock Trading Cools, Fund-Oriented Retail Offers Stable Support
JPMorgan strategists also pointed out that retail activity in individual stock trading has visibly slowed. In the second quarter of 2025, retail investors actively participated in trading individual stocks, significantly driving market gains at the time; however, enthusiasm for stock trading gradually faded afterward, with only a brief revival in October 2025.
Meanwhile, another more traditional retail group — long-term investors favoring stock funds — has continuously provided stable support to the market in this phase. The JPMorgan team emphasized that for the stock market, the more crucial metric is not the frequency of retail trading in stocks or options, but the proportion of retail investors within the overall flow of end-investor funds.
Historical Patterns Highly Similar, Strong Q2 Expected
JPMorgan strategists specifically highlighted the high degree of similarity in S&P 500 index trends between 2025 and 2026: both years showed lackluster returns in Q1 and robust rebounds in Q2, with 2025 ultimately delivering considerable rewards to U.S. investors.
The team believes that if retail trading activity picks up as expected in the second quarter, it will resonate with this historical pattern and provide extra upward momentum for the market. The reentry of retail investors may become an important variable in whether the U.S. stock market’s strong second-quarter trend can continue.
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