Wall Street money takes back over from small investors as driving force of the stock market

Institutional investors are taking the wheel in the stock market.

After years on a big buying streak, retail traders appear to be moving to the sidelines. At the same time, data from Vanda Research shows that big investors have held steady on stocks in the face of spiking Treasury yields.

"Institutional investors have been surprisingly resilient through this week's macro volatility," Viraj Patel, global market strategist at Vanda, wrote to clients on Friday.

Options flows from institutional investors are around three times higher than a typical September, the data shows.

Patel said that big money's flows have turned up over the past five sessions, despite the 10-year and 30-year U.S. Treasury yields climbing to their highest levels in more than a decade. He called that a "reasonably constructive signal for risk appetite" among institutional investors hidden in the broader story of de-risking.

Patel said that institutional traders are buying select artificial intelligence plays amid the volatility.

He pointed to Meta Platforms as a top pick in particular last week. Shares of the Facebook parent have surged almost 13% in the week following its debut of the Muse Charm device. Momentum has been building for the stock since Meta unveiled its Muse personal AI agent earlier this month.

"Macro uncertainty isn't stopping risk-taking," Patel said. Instead, "it's making investors far more selective."

Meta, 5-day

Retail traders had a banner performance in 2025, leading some to declare that they had shed the "dumb money" title. Their performance was credited in part with decisions to buy the dip during market declines in the wake of President Donald Trump's tariff rollout.

But Goldman Sachs said retail investors' share of S&P 500 trading volume has trended down from its peak nearly a year ago. It's now more than three percentage points below the five-year average, the bank found.

The S&P 500 is ended last week more than 1% higher despite the pressure from rising Treasury yields. That advance has pulled the benchmark into positive territory for the month.