Can Small Investors Be the Saviors of Wall Street?

The American Stock Index is Going Through a Tough Period

In recent days, the S&P 500 has experienced losses due to sharp sell-off waves in the markets. Especially, its drop below the 6,800 points level has increased concerns among investors. Last month, despite testing the critical 7,000 points level, the stock market seems to have reached a kind of breaking point.

AI Optimism has Given Way to Concern

Emerging technology and artificial intelligence (AI) investments had created great optimism among investors. However, investors are starting to realize that this does not always yield positive results. According to Bloomberg data, around 1 trillion dollars has been wiped off the market value of software companies in recent trades. Especially the expenditures of giants like Alphabet were met negatively by the market, despite the anticipated increase in revenues. Investors reacted to the rising costs of artificial intelligence by executing sharp sell-offs.

Companies Outside the Sector are Gaining Strength

The chaos in the markets is mainly focused on technology stocks. However, the equal-weighted version of the S&P 500 is testing record levels thanks to the strong performance of non-tech companies. According to analysts at Deutsche Bank, many non-tech companies are progressing strongly despite these fluctuations. While a large portion of companies experienced declines due to the negative atmosphere in the tech sector, investors preferred purchases coming from other sectors.

Individual Investors are Turning Declines into Opportunities

Individual investors are starting to play an important role in the market by taking advantage of buying at lows. This group, often overlooked by institutional investors, has become much more effective on Wall Street recently. According to JP Morgan data, the activities of individual investors in January broke a significant record by exceeding purchases made from the April lows by 22 percent.

Although retail purchases have somewhat slowed in recent transactions, individual investors continue to support the market with a weekly average of 6.8 billion dollars net purchases over the past 12 months.