Retail investors entered and bought $1.0 billion in stocks. This marks five consecutive weeks of purchases by ordinary traders. Hedge funds also increased their exposure. They bought $1.2 billion, marking their eighth week of purchases in the last nine. Large investors sold. Small players and fast money bought.
Institutions are unloading U.S. stocks just as inexperienced money and hedge funds absorb the supply.
Equity ETFs saw $2.2 billion in inflows during the same week. At the same time, individual stock names recorded $8.3 billion in outflows. Investors preferred broad funds over individual companies. The difference between ETF inflows and individual stock withdrawals was clear.
Outflows from individual stocks have now occurred in 13 of the last 15 weeks. Total withdrawals during this period amount to $52.0 billion. Institutions are selling directly into retail trader and hedge fund bids. Flow data shows a steady transfer of ownership.
Retail demand following the Supreme Court's decision remained limited. At 10 AM ET, the high court said that President Donald Trump incorrectly used the International Emergency Economic Powers Act to impose retaliatory tariffs. Traders reacted quickly. Major averages surged, fell, and recovered in a matter of hours.
The Nasdaq Composite is trying to end a five-week losing streak. On Friday at noon, the index was up 0.8%. This brought its weekly gain to 1.4%. If it holds, the tech-heavy index will break its longest weekly losing streak since May 2022.
Markets prepare for tariffs, Iran risk, and Nvidia results
After the decision, Trump said he would impose a new global tariff of 10% using other trade laws. Stocks reacted in stages on Friday.
Tim Holland, director of investments at Orion Wealth Management, wrote: “It seems that Wall Street and Main Street will be dealing with the issue of trade and tariffs for some time.” Tim focused on the ongoing political risk facing the markets.
The Supreme Court did not address whether importers will receive refunds for tariffs already paid under higher rates. The issue now returns to lower courts. Ed Mills, managing director and Washington policy analyst at Raymond James, wrote: “We expect the process for companies to receive refunds for tariffs to be long and challenging, with litigants needing to bring individual cases or participate in class actions.”
Future tariffs may not be as broad unless Congress provides support. If inflation decreases, the Federal Reserve may gain room to cut interest rates. Traders are also watching geopolitical risk.
Trump will give his State of the Union address on Tuesday night before a joint session of Congress. Barclays' trading desk said the speech may include an ultimatum to Iran.
Meanwhile, Nvidia reports earnings on Wednesday, and as the company is one of only two names in the Magnificent Seven that has posted stock gains this year, expectations are high. Analysts want strong revenues and higher forecasts tied to artificial intelligence spending. The Cryptopolitan will be broadcasting the earnings live on February 25.
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