Market Rally Is Due to Retail Investors ‘Buying the Dip,’ Says Bank of America (BAC)

The rally that has led the U.S. stock market to recover from its steep losses in early April has been due, almost entirely, to individual investors buying the dip, says Bank of America (BAC).

Data from the bank shows that individual investors have been net buyers of stocks for 21 consecutive weeks, the longest streak on record and more than double the previous records seen in 2021 and 2022. And rather than sell during the sharp downturn in April after U.S. President Donald Trump announced tariffs on more than 150 nations, retail investors kept on buying as share prices fell.

Over the last four weeks, Bank of America says that its individual private clients purchased a record $2 billion of equities. That stands in sharp contrast to hedge funds that sold a record $1.5 billion of stocks during the market chaos. At the same time, Bank of America’s institutional clients dumped $2.7 billion of stocks, the second-largest amount in history.

Market Rebound

Bank of America stresses the divergence between individual and institutional investors, noting that it is bigger than what was observed during the 2022 bear market when stocks endured a steep selloff as the U.S. Federal Reserve raised interest rates to lower inflation.

After flirting with a bear market (a drop of 20% or more) in early April, the S&P 500 has come roaring back. Since April 8, the benchmark index has completely recovered and is now back above both its 50- and 200-day moving averages. Bank of America attributes the impressive rebound, one of the biggest short-term comebacks in market history, to buying on the part of retail investors.

BAC stock has gained 2% on the year.

Is BAC Stock a Buy?

Bank of America’s stock has a consensus Strong Buy rating among 20 Wall Street analysts. That rating is based on 17 Buy and three Hold recommendations issued in the last three months. The average BAC price target of $49.16 implies 10.82% upside from current levels.

Read more analyst ratings on BAC stock