Did You Buy the Dip? It Looks Like Retail Investors Are Feeling Good Again

Market Overview - The tech-heavy Nasdaq Composite rose approximately 2.4%, leading major indexes higher after a week of volatility, with significant gains in AI stocks and chipmakers like Broadcom (AVGO) and Micron (MU), both up over 7% [1][6] - Retail investors contributed to the market rebound by aggressively buying the dip, as indicated by a sharp increase in S&P 500 ETF inflows during the previous week's decline [1][6] Investor Sentiment - There are signs of improving investor sentiment, particularly among retail investors, as they often reflect market sentiment and their behavior can drive stock market returns [2] - The AAII Sentiment Survey indicated a slightly more optimistic outlook among individual investors compared to the previous week, when nearly half were bearish [9] Economic Concerns - Concerns about an AI bubble and uncertainty regarding monetary policy have weighed on market sentiment, with the S&P 500 and Nasdaq dropping nearly 2% and 2.7% respectively last week [3] - Investors are particularly focused on whether the Federal Reserve will cut interest rates next month, with mixed signals from the labor market and inflation data influencing expectations [4][7] Volatility and Market Indicators - The Cboe Volatility Index (VIX) stood at about 21, indicating a level above which stocks typically experience smoother trading conditions [8] - CNN's Fear & Greed index showed less pessimism after recording its most negative reading since early April, suggesting a potential shift in market sentiment [8]