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LIVE MARKETS-Retail investors run for the exit as midterms rattle tech

By Reuters News

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RETAIL INVESTORS RUN FOR THE EXIT AS MIDTERMS RATTLE TECH

Retail investors dumped single stocks this week with purchases falling close to their lowest levels this year, largely driven by volatility sparked by the US midterm election, JPMorgan estimates.

Momentum-based trading cratered in October, triggering its largest single-month underperformance in over 40 years this week, according to a note from JPMorgan.

Democrats swept the midterms on Tuesday, winning both the House and Senate and flipping stronghold states that had sent Republicans to the Senate for generations.

The win put data centers squarely in the spotlight. Markets fear a Democratic-controlled Congress could pursue AI regulation and ramp up hearings and investigations into the buildout, amid widespread public backlash over environmental strain and energy prices.

The selloff singled out data centers and utilities stocks on Wednesday, then gathered full force and swept everything tech-related on Thursday. The S&P 500 and the Nasdaq marked their biggest daily falls since early April 2025.

Retail investors came close to their biggest day of single-stock selling since the 2020 COVID-19 crash on Thursday, selling a net $338 million of single stocks until 3 p.m. ET on Thursday, according to Vanda Research.

The so-called Magnificent Seven group held firm, though. Retail investors bought the dip in Alphabet GOOGL.O, following a more than 12% drop in the Google owner's stock as it announced plans to increase its capital expenditure in 2027 last week. Apple was the only one sold this week, until Thursday, per JPMorgan.

Analysts also said exchange-traded funds saw renewed appetite. Most saw purchases, barring currency/crypto ones and multi-asset funds.

Healthcare ETFs rose to their highest levels in about two and a half years, as investors rotated into defensive sectors such as healthcare and consumer staples. The latter were the only individual stocks in favor outside the Mag 7, according to JPMorgan's note.

Retail investors, who gained momentum during the COVID-19 pandemic, have increasingly become a crucial force in steering US markets, as their "buy the dip" mentality has helped keep lows temporary.

(Purvi Agarwal)

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Unemployment by race and ethnicity https://www.reuters.com/graphics/USA-STOCKS/lgvdbdlnzvo/UErace.png

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