Retail traders raised their exposure to U.S. stocks in June encouraged by healthy returns, with their focus shifting to electric-vehicle firms from artificial intelligence stocks earlier in the year.
They poured in $1.4 billion per day on average in U.S. equities in the month, closing in the all-time record of $1.5 billion a day in March, Vanda Research said.
Broadly U.S. stocks enjoyed their best monthly performance in eight months in June as signs of cooling inflation fueled bets the Federal Reserve could be near the end of its rate-hiking cycle.
"While it may be difficult to see a further increase in the pace of cash equity purchases from these levels, there is still room for more speculative buying in the options space," said Marco Iachini, senior vice president at Vanda Research that track retail flows.
Retail trading activity as a percentage of total market volume jumped to 21.9% as of July 5, highest since Jan. 24, compared with 14% on May 31, according to J.P.Morgan data.
Record vehicle deliveries by Tesla, consistently a favorite among the retail crowd, have helped to spark small-time investors' interest in EV stocks, including Rivian, Iachini said.
EVs have garnered increased demand on incentives under the Inflation Reduction Act and a competitive pricing environment.
In contrast, demand for AI stocks, including C3.ai, from retail investors has somewhat slowed from earlier this year after they rallied for weeks, Iachini added.
Meanwhile, Joby Aviation's 67% surge since last week was driven by strong retail buying after a green light from U.S. aviation regulator for flight testing of its electric air taxi.
About 11.61% of Joby shares are under short position and there could be more short covering if the stock price continues to climb, said Peter Hillerberg, co-founder at analytics firm Ortex.
(Reporting by Medha Singh in Bengaluru; Editing by Shinjini Ganguli)
