Morgan Stanley said retail investors currently account for about 11% of the total trading volume of U.S. stocks, the highest level since January 2021. In addition, the participation of retail investors has reached 90% compared to the past 5 years; Among them, the proportion of participation is higher in the large-cap sector, such as information technology, communication services and consumer discretionary.
Mike Wilson, the bank's equity strategist, said he favored defensive industries at a time when PMI peaked and the Fed tightened policy. "Stocks rose strongly at the end of last year, with the S&P 500 approaching our year-end bullish target of 4800 points, but the leadership is clearly a defensive sector," he said. ”
"The four defense sectors of major consumer goods, real estate, utilities and healthcare all rose 8%-10% in December, 4%-5% higher than the S&P 500." "Based on monthly industry returns since 1990, these sectors all returned more than one standard deviation in December."
The main reason for this performance is that investors mostly try to lock in earnings at the end of 2021 and seek to hedge during the end of the year; Separately, investors expect U.S. economic growth to slow in 2022 due to fed policy tightening, concerns about the Omicron variant, and potential supply chain imbalances (supply gradually recovers and demand peaks), which strengthens investors' safe-haven demand.
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