Institutional Investors Drive S&P 500 Gains via AI Focus

Institutional investors have overtaken retail traders as the primary force driving the stock market, according to data from Vanda Research and Goldman Sachs. While the share of S&P 500 trading volume from retail investors has dropped more than three percentage points below the five-year average, institutional investors have remained resilient despite spikes in 10-year and 30-year U.S. Treasury yields.

Viraj Patel, a global market strategist at Vanda, noted that while macro uncertainty has not stopped risk-taking, it has made investors more selective. This shift is evident in institutional options flows, which are currently three times higher than the typical September average. These investors are concentrating their capital on specific artificial intelligence opportunities.

Meta Platforms has become a primary beneficiary of this trend, with shares surging nearly 13% following the launch of the Muse personal AI agent and the Muse Charm device. This institutional momentum helped the S&P 500 end last week more than 1% higher, moving the index into positive territory for the month.