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US Markets

Retail Activity Remains Elevated

As we reach the end of summer, we update our retail trading charts based on data from Nasdaq Data Link, finding that retail activity has remained (relatively) strong so far in 2023; however, we also see a summer slowdown, which before Covid created a year-long news cycle, was relatively normal. 

Gross retail trading holding up 

The data at the very end of the chart below shows a summer slowdown in both retail (green) and market-wide (blue line) liquidity: 

  • Daily retail trading slowing from a peak of around $39 billion per day to just over $34 billion per day more recently (green area below). However, that’s still well above the pre-Covid levels. 
  • Market-wide value traded also slowed (blue line below) from highs around $550 billion per day to below $500 billion per day. 

Chart 1: Gross retail trading value remains above pre-covid levels (market-wide trading in blue, right axis) 

Gross retail trading value remains above pre-covid levels (market-wide trading in blue, right axis)

However, a slowdown in trading over the summer isn’t unexpected. Historically, the average volumes in summer are about 10% below the levels seen at the start and end of the year (red line) and 2023 (blue line) is following that trend. 

Chart 2: Volumes do typically slow down over summer

Volumes do typically slow down over summer

Retail mostly selling corporates 

Looking at retail flows in corporate stocks, we see a continuation of the net selling at a single stock level.

A spike in Consumer Discretionary buying in June was predominantly retail buying of TSLA as it started to recover from recent lows. That was followed by buying in Tech and Communications stocks in July as the overall market rally extended (green line). 

However, with the market pullback in August, we’ve seen a return to net retail selling across every sector. 

Chart 3: Net stock flows by month and sector (Line shows SPY price)

Net stock flows by month and sector (Line shows SPY price)

Speaking of trading in corporate stocks, it is interesting to look again at what stocks retail investors, in particular, like to trade.  

For this, we use FINRA data. As we’ve discussed before, their non-ATS TRF data is another way to assess what is (mostly) retail trading. We show each ticker as a dot in the chart below.  

The darker green dots have the majority of their liquidity trading on the non-ATS TRF, while dark orange dots trade more on-exchange and in dark pools. The further right the dots, the larger the company. The higher the dots, the more frequently the whole market cap of the company trades (turns over) – with a typical stock trading between 1x and 3x its market capitalization each year. 

A couple of overarching trends that this data highlights are that retail tends to like to trade: 

  • Well-known large-cap brands, such as stocks like AAPL, TSLA, AMD, NVDA, MSFT and META. 

  • Very small-cap stocks, especially those with a market cap below $100 million. Interestingly, despite these stocks being outside typical institutional benchmarks (like the Russell 3000), the turnover in many of these stocks is actually higher than for larger stocks included in futures and ETFs. 

Chart 4: Stocks and retail (non-ATS TRF) share of all trading 

Stocks and retail (non-ATS TRF) share of all trading

Retail trades more corporates but buys more ETFs 

Just because retail has been selling corporates doesn’t mean they are liquidating their portfolios. We know from prior work that retail investors are consistently net buyers of ETFs. Looking at overall data on a daily basis confirms that this is still the case. In fact: 

  • There have been only three days so far this year with net selling ETFs. On an average day, retail net buys $342 million of ETFs across multiple asset classes and regional exposures.  

  • In contrast, for corporates, around two-thirds of dates see retail net selling. 

Adding this up over the whole year, we see retail net buying of $43 billion, with $57 billion into ETFs, making stocks a $14 billion net sell. 

Chart 5: Net ETFs and stocks 

Net ETFs and stocks

However, gross trading activity isn’t so strongly weighted to ETFs. In fact, stocks tend to trade around three times as much as ETFs. Buying and selling of stocks combined adds to around $26 billion in stock liquidity each day, while ETF trading is typically below $9 billion per day. 

Chart 6: Gross ETFs and stocks 

Gross ETFs and stocks

However, market-wide ETF trading adds to around $150 billion per day. That means buying plus selling adds to around $300 billion per day.  

So even though retail buying plus selling adds to around $9 billion of ETFs each day, their trading remains a fraction of total ETF liquidity. 

Retail continues to add liquidity to U.S. markets and assets to U.S. ETFs 

Despite a summer slowdown across the market and retail trading, data suggests retail remains active in the U.S. stock market at above pre-Covid levels.  

Retail contributes significant liquidity to many stocks and consistently adds assets to U.S.-listed ETFs. 

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Phil Mackintosh


Phil Mackintosh is Chief Economist and a Senior Vice President at Nasdaq. His team is responsible for a variety of projects and initiatives in the U.S. and Europe to improve market structure, encourage capital formation and enhance trading efficiency. 

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