Retail investors pour into Tesla, Palantir, and Bitcoin ETF: Record buying helps stabilize the US stock market, mitigating the effects of Moody's downgrade.

Taiwan • Business • 05/20 04:48
Retail investors pour into Tesla, Palantir, and Bitcoin ETF: Record buying helps stabilize the US stock market, mitigating the effects of Moody's downgrade.

After Moody's downgraded the U.S. sovereign credit rating, retail investors sparked a record-breaking buying spree on May 19, with a net purchase of $4.1 billion in U.S. stocks, reaching a new all-time high. Tesla, Palantir, and Bitcoin ETF were the primary targets for capital inflow. Despite the S&P 500 index dropping more than 1% in early trading, it recovered due to retail buying, closing up 0.09%. Wall Street analysts recommend that investors see market pullbacks as opportunities to increase their positions.

Key Updates

05/21 18:19

The US lifts AI chip export restrictions, leading to a rise in US stocks, while the tax cut bill leads to a sell-off in US bonds and a weaker dollar.

In mid-May, the U.S. Department of Commerce lifted export restrictions on Chinese AI chips, which boosted U.S. tech stocks and led to impressive performances by related funds. The Congressional tax cut bill has raised concerns about the fiscal deficit, resulting in a sell-off of U.S. Treasuries, pushing the 30-year yield above 5%, and a weaker dollar index. European stock markets, influenced by U.S. policies, experienced mixed gains and losses.

05/21 14:50

During the U.S. stock market rebound, hedge funds' short selling reaches a ten-year high, while retail investors break records by buying the dip in a contrarian move.

During the recent rebound in the US stock market, hedge funds have been aggressively shorting, with the COT report indicating cumulative short positions amounting to $25 billion, hitting a ten-year high. Meanwhile, retail investors, unfazed by market uncertainty, continue buying the dips, with single-day net purchases reaching a new all-time high. This highlights a significant split in market sentiment, with institutions remaining skeptical of the rebound while retail investors view it as a buying opportunity.

05/21 06:18

The U.S. stock market faces multiple risks: rising debt levels and financial stress dampen optimism.

The S&P 500 Index is approaching a technical bull run, but market optimism is hiding several risks, including rising corporate and government debt, a weakening U.S. dollar, and pressures facing the banking and life insurance industries. After Moody's downgraded the U.S. credit rating, the 20-year Treasury bond yield is approaching 5%, challenging the stability of U.S. stocks. This article analyzes these sources of risk, uncovering hidden crises.

05/20 13:47

Jim Cramer, a CNBC personality, comments on the 10 biggest stock market events of May 20, 2025, and five key things investors should know before Tuesday's market opens.

On May 20, 2025, investors are faced with corporate earnings reports, policy reviews, and market dynamics. CNBC host Jim Cramer outlined the top ten stock market events, including Home Depot's earnings report boosting its stock price, AMD's sale of its server business, and MongoDB's downgrade. Meanwhile, the top five market headlines before Tuesday's opening highlight macroeconomic and corporate developments, such as comments from Federal Reserve officials, rising mortgage rates, and retailers' strategies regarding tariffs. These events impact market sentiment and investment strategies.

05/20 10:51

Moody's downgrade leads to a drop in U.S. stock futures: Dow Jones at 34,800 points, S&P 500 at 4,960 points, Nasdaq 100 at 21,440 points

On May 20, 2025, Moody's downgraded the U.S. sovereign credit rating from Aaa to Aa1, leading to a drop in the futures of the three major U.S. stock indices. Dow Jones Industrial Average futures stood at 42,800 points, S&P 500 futures were approximately 5,960 points, and Nasdaq 100 futures were approximately 21,440 points. Concerns over the U.S. fiscal deficit and debt sustainability have intensified, putting pressure on the stock, bond, and foreign exchange markets simultaneously. Despite the recent strong performance of the S&P 500 spot index, the weakness in the futures market reflects investors' cautious outlook on future trends.

05/20 04:48

Retail investors pour into Tesla, Palantir, and Bitcoin ETF: Record buying helps stabilize the US stock market, mitigating the effects of Moody's downgrade.

After Moody's downgraded the U.S. sovereign credit rating, retail investors sparked a record-breaking buying spree on May 19, with a net purchase of $4.1 billion in U.S. stocks, reaching a new all-time high. Tesla, Palantir, and Bitcoin ETF were the primary targets for capital inflow. Despite the S&P 500 index dropping more than 1% in early trading, it recovered due to retail buying, closing up 0.09%. Wall Street analysts recommend that investors see market pullbacks as opportunities to increase their positions.

05/19 22:49

Moody's Downgrades U.S. Credit Rating, U.S. Stocks Rebound Despite the Downgrade: Dow Jones Gains 137 Points, Philadelphia Semiconductor Index Declines

On May 16, Moody's downgraded the U.S. sovereign credit rating from "Aaa" to "Aa1," causing initial market volatility. However, on May 19, the three major U.S. stock indices closed higher despite the trend. The Dow Jones Industrial Average rose by 137.33 points, the S&P 500 inched up 0.09%, the Nasdaq ticked up 0.02%, while the Philadelphia Semiconductor Index fell by 0.50%. Investor sentiment steadied as retail buying supported the market, showing confidence in U.S. assets. In the bond market, the yield on the U.S. 10-year Treasury rose to 4.55%, and safe-haven assets like gold rose 1.54%.

05/19 13:47

CNBC personality Jim Cramer calls out the week's top ten stock market events and five must-know things before Monday's market opens.

On May 19, 2025, Moody's downgraded the United States' sovereign credit rating, leading to a drop in U.S. stock futures, a rise in long-term bond yields, and a withdrawal of funds from risk assets. CNBC host Jim Cramer listed the top ten stock market events for the week, including corporate earnings reports, the impact of the downgrade, and developments in AI technology. The five key points to watch before Monday's market opening provide context, including Moody's downgrade, last week's stock market rebound, Nvidia's new technology, progress on the congressional budget bill, and the tariff dispute involving Walmart and Trump.

05/19 10:50

AI chips are becoming the new global currency: Bank of America is optimistic about Nvidia and AMD, Saudi Arabia's major order highlights the demand for AI infrastructure

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05/19 06:51

U.S. stock index futures continue to decline following Moody's credit rating downgrade: Dow futures at one point fell more than 300 points.

On May 19, 2025, Moody's downgraded the U.S. sovereign credit rating from Aaa to Aa1, leading to a decline in U.S. stock futures during the Asian trading session. Dow Jones Industrial Average futures fell by 311 points, S&P 500 futures fell 60 points, and Nasdaq 100 futures declined 278 points. This downgrade sparked market concerns, affecting global stock markets and driving up the prices of safe-haven assets such as gold. U.S. Treasury yields neared 4.5%, becoming a key focus for the market, potentially impacting the flow of funds into the stock market.

Retail Buying Reaches Historic High

According to JPMorgan's statistics, as of 12:30 PM Eastern Time on Monday, retail investors had a net purchase of $4.1 billion in U.S. stocks, setting a record high for that time period and surpassing the $4 billion threshold for the first time by midday. On that day, retail trading volume accounted for 36% of the overall market, surpassing the late April peak and setting a new historical high.

This wave of buying was mainly concentrated on a few popular targets. Tesla attracted $675 million in inflows, followed by Palantir with a net purchase of $439 million. Bitcoin ETFs also became a focus for fund allocation, indicating that retail investors' enthusiasm for crypto assets remains undiminished. Meanwhile, Nvidia faced continued selling by retail investors, becoming a net sell target.

Moody's Downgrade Triggers Early Sell-off

Last Friday (May 12) after the market closed, international credit rating agency Moody's downgraded the U.S. sovereign credit rating from "Aaa" to "Aa1," citing the continuous rise in the proportion of government debt and interest expenses, which has exceeded that of countries with the same rating. This news caused market unease, and after the U.S. stock market opened on Monday, the three major indices fell across the board, with the S&P 500 index dropping by as much as 1.1%, and the Nasdaq and Dow Jones indices also declining.

However, as retail funds poured in, market sentiment quickly stabilized. The S&P 500 index eventually rose slightly by 0.09%, the Dow Jones Industrial Average increased by about 137 points (+0.3%), and the Nasdaq index was almost flat. This rebound also continued the S&P 500 index's five-day winning streak.

Tesla and Palantir in the Spotlight

Despite Tesla's stock price falling by 2.7% on the day, it still attracted a large influx of retail funds. According to reports from Morgan Stanley and other analysis institutions, there is still controversy over Tesla's valuation, with some analysts believing its market value is too high to match actual revenue and profits. However, retail investors seem to ignore these concerns, choosing to buy more during the stock price dip.

Palantir, on the other hand, experienced a pullback after a recent surge in stock price, falling by 2.4% on Monday. Nevertheless, the company has attracted market attention due to its applications in the field of artificial intelligence and its cooperation with NATO. According to Bank of America analysts, Palantir is seen as a "market definer for AI military applications," with its technical capabilities highly regarded by institutions and government departments.

Bitcoin ETFs Attract Inflows

In addition to tech stocks, retail investors are also channeling funds into Bitcoin ETFs. Although the cryptocurrency market is highly volatile and risky, Bitcoin-related assets have become popular again amid a weakening dollar and increased risk aversion. According to JPMorgan's data, the total inflow into ETFs reached $1.5 billion, with Bitcoin ETFs accounting for a significant proportion.

Wall Street Analysts Recommend Continued Buying

In the face of Moody's downgrade and market volatility, many Wall Street analysts have expressed optimism. Morgan Stanley strategist Michael Wilson stated that the downgrade shouldn't trigger panic selling; instead, it's a good chance to buy on dips. He pointed out that the easing of U.S.-China trade tensions helps reduce the risk of economic recession.

HSBC Holdings' Chief Multi-Asset Strategist Max Kettner believes that any decline in risk assets should be seen as an opportunity to increase exposure. Clough Capital Partners CEO Vincent Lorusso also noted that retail investors are allocating funds to assets with the most attractive risk-adjusted returns, which is a reasonable strategy in the context of declining inflation and stable corporate balance sheets.

S&P 500 Index Stabilizes, Continues Rebound Trend

Supported by retail buying and analyst confidence, the S&P 500 index successfully recovered its early losses on Monday, rising slightly by 0.09% and continuing its five-day winning streak. According to Bloomberg and LSEG data, the index has rebounded by about 20% from its April low, technically entering bull market territory.

This rebound began in mid-April when U.S. tariff policies triggered market sell-offs, and the S&P 500 was close to the bear market edge. Retail investors have since started to enter the market in large numbers and have continued to increase their holdings to this day. Meanwhile, institutional investors have mostly remained on the sidelines, not significantly participating in this rebound.

References

People Also Ask...

faq

Could the strong buying from retail investors in Tesla and Palantir be because AI technology's potential is boosting everyone's confidence?

faq

Tesla and Palantir stock prices are falling, yet why are retail investors still buying like crazy?

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Why do retail investors love Tesla and Bitcoin ETFs? Is it because they think their actions can change the future?