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Retail investors flocked to stocks in Monday's rout, Vanda Research says

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NEW YORK, July 21 (Reuters) - U.S. retail investors bought a record amount of equities on Monday, buying the dip as stocks took their biggest tumble in months over fears the fast-spreading Delta variant of the coronavirus might spark renewed lockdowns, analysts at Vanda Research said.

Retail investors, who tend to buy more stocks on days when the market suffers major drawdowns, bought a record $2.18 billion of equities on Monday, Vanda, which tracks retail trading, said in a note to clients on Wednesday.

All three major U.S. stock indexes ended Monday sharply lower, with the S&P 500 and the Nasdaq Composite indexes suffering their largest one-day percentage drops since mid-May, while the Dow Jones Industrial Average had its worst day in nearly nine months. As of Wednesday, the market had recouped its losses, helped by upbeat corporate earnings.

The continued strong level of retail participation in equities suggests the new cohort of individual investors that entered the market around the start of the pandemic has staying power.

Of the equities retail investors bought on Monday, 44% were exchange-traded funds, compared to around 29% on an average day, with $482 million in retail purchases of the SPDR S&P 500 ETF Trust, which tracks the Standard & Poor’s 500 index, alone, Vanda said.

Stocks tied to the reopening of the economy from the pandemic were among the worst performing groups on Monday, with institutional investors dumping those names, and the lack of interest from retail investors contributing to the violent sell-off, the analysts added. (Reporting by John McCrank Editing by Paul Simao)

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