Retail investors had two favorite trades during Monday’s market turmoil
Mom-and-Pop investors rushed into a pair of trades on Monday following the U.S.-Israeli strikes on Iran. Retail investors sent millions of dollars on a net basis into the State Street Energy Select Sector SPDR ETF (XLE) and Palantir in the first hour of Monday’s session, according to VandaTrack. But the broader market didn’t see the same support from small traders, the investing data firm found. “The message from the tape is straightforward,” Vanda analyst Ashwin Bhakre told CNBC. “This wasn’t broad panic. It was selective repositioning.” These moves come as trades raced to position for a potential long-term global conflict. The U.S. and Israel’s military action killed Iran’s Supreme Leader Ayatollah Ali Khamenei, prompting retaliatory strikes from the Middle Eastern country. U.S. President Donald Trump said the conflict could last for weeks . Gen. Dan Caine, chairman of the Joint Chiefs of Staff, said the fighting could result in additional military deaths . Retail investors net bought more than $14 million worth of the XLE fund in the first hour of trading, a jump of more than 425% compared with the same period of Friday’s session. The ETF rallied to a 52-week high in Monday’s session as oil prices climbed amid concerns that the conflict would limit supply. “Retail didn’t tiptoe into energy; they moved decisively,” Bhakre said. “The scale of buying relative to Friday suggests oil quickly became the preferred geopolitical hedge at the open.” XLE ALL mountain The XLE, all-time chart Retail investors similarly jumped into the energy trade following the U.S. strike against Venezuela earlier this year. These small traders also poured more than $8 million into defense technology stock Palantir in the 60-minute period. That marks a “dramatic change” from the net selling of more than $500,000 seen during the first hour of Friday’s session, Bhakre said. Palantir surged more than 6% in midday trading on Monday, helping lead the broader defense sector higher. By comparison, the iShares U.S. Aerospace & Defense ETF (ITA) added more than 2%. The stock “was rapidly reframed from a software growth name into [defense] exposure,” Bhakre said. “The speed of that shift is notable.” PLTR ITA 1D mountain Palantir and the ITA, 1-day Selective and defensive Other popular plays didn’t see such a boost. Retail investors still net bought shares of Nvidia in Monday morning trading. But the first hour saw a 76% drop in net flows compared with the most recent trading day. That’s part of a trend of traders pulling back exposure to higher-risk technology names amid rising uncertainty, Bhakre said. Interest in the artificial intelligence trade was “clearly scaled back,” but the group wasn’t completely abandoned, he said. The State Street SPDR S & P 500 Trust ETF (SPY) had “heavy” but “mixed” activity, the analyst said. The S & P 500 broke into positive territory in midday trading after dropping more than 1% earlier in the day. “Retail isn’t simply ‘buying the market’ right now,” Bhakre said. “They’re targeting specific themes instead of broad index exposure.” Retail traders had a bumper year in 2025 due in part to a buy-the-dip strategy. Monday’s action shows that while this group isn’t panic-selling stocks, they are buying strategically, Bhakre said. They’re also getting defensive, Vanda found. For example, Bhakre said there was high demand for the iShares 0-3 Month Treasury Bond ETF (SGOV) and ProShares UltraPro Short QQQ (SQQQ) on Monday morning. “Retail wasn’t just rotating,” Bhakre said “They were actively hedging.”
