US Stock Market Close: A Potential Major Decline Interrupted by Record-Breaking Retail Investor Buying Spree

Last night and this morning, the US stock market initially weakened significantly after opening due to Moody's downgrade of the US sovereign rating. However, amid a buying frenzy by retail investors, a potential "triple-kill" scenario for stocks, currencies, and bonds was averted.

The S&P 500 index, despite diving over 1% at the open, was pushed to close higher for the sixth consecutive session.US Treasuries also rebounded significantly from their sharp declines, with the 30-year US Treasury yield surging to 5% during the day before pulling back to 4.9%. The US dollar exchange rate, which has little to do with retail investors, continued to weaken.

At the close, the S&P 500 index rose 0.09% to 5,963.6 points; the Nasdaq Composite Index gained 0.02% to 19,215.46 points; and the Dow Jones Industrial Average advanced 0.32% to 42,792.07 points. Based on closing prices, the S&P 500 index has rebounded 17% from its April low and is just 3% away from setting a new all-time high.

(Daily chart of the S&P 500 index, source: TradingView)

According to data compiled by JPMorgan Chase's quantitative team, as of 12:30 PM New York time on Monday,individual investors net purchased $4.1 billion worth of US stocks, setting a new historical record for that time period and the first time the $4 billion threshold was breached before noon.The data also showed that retail investors accounted for as much as 36% of trading volume on Monday, surpassing late April levels to set a new historical high.

(Source: JPMorgan Chase)

The question is whether retail investors are being overly optimistic about the current situation.

Jamie Dimon, the "Wall Street titan" and CEO of JPMorgan Chase, issued a fresh warning on Monday, stating that "the current credit market risks are extremely high. Those who have not experienced a major recession are completely ignoring the potential crisis that could erupt in the credit sector.People remain optimistic because they have not yet seen the actual impact of tariffs. The market fell 10% and then rebounded 10%. I believe this complacency has reached a dangerous level."

Dimon also warned that Wall Street's earnings expectations for S&P 500 constituents have already declined due to the initial impact of tariffs, and this figure will fall further. He pointed out that in six months, these earnings growth forecasts will drop from around 12% at the beginning of the year to zero growth. If this happens, it means that the price-to-earnings ratio will also decline.

As more and more countries indicate that they are not in a hurry to reach a hasty trade agreement with the US, the market's focus has temporarily shifted to US fiscal issues. The Trump administration is pushing for a massive tax cut and spending bill, and the market is also watching whether significant turmoil in the US bond market is needed to change US politicians' indifference to the massive debt problem.

Performance of Popular Stocks

US tech giants showed mixed performance on Monday. Apple, which was exposed for its "chaotic AI strategy," fell by 1.17%, Microsoft rose by 1.01%, Amazon increased by 0.28%, Nvidia gained 0.13%, Google-A climbed by 0.21%, Tesla dropped by 2.25%, Meta edged up by 0.01%, and Advanced Micro Devices fell by 2.07%.

Chinese ADRs also experienced a night of low opening followed by a rally. Despite the Nasdaq Golden Dragon China Index opening down over 1%, it ultimately closed down 0.17%.

By the close, Alibaba fell by 0.4%, JD.com rose by 0.42%, Baidu dipped by 0.1%, Pinduoduo increased by 0.71%, Bilibili plunged by 4.97%, NIO fell by 1.46%, NetEase declined by 0.4%, Futu Holdings rose by 1.88%, Li Auto dropped by 1.67%, XPeng Motors fell by 3.34%, and EHang Holdings declined by 7.57%. Xiaomi Group's ADR, which is set to release its self-developed 3nm chip, closed up 3.66% on Monday.

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