Institutional investors are taking control of the US stock market. After years of aggressive buying, retail traders appear to be shifting to the sidelines.

Meanwhile, data from Vanda Research shows that large investors are holding firm to equities even as US Treasury yields surge. "Institutional investors showed astonishing resilience during this week's macro volatility," Viraj Patel, global market strategist at Vanda, wrote in a note to clients on Friday.

Data shows that institutional investors' options flows were roughly three times the typical September level. Patel said that over the past five trading sessions, large-capital inflows have rebounded, even as 10-year and 30-year US Treasury yields climbed to their highest levels in more than a decade. He called this a hidden "reasonably constructive signal" within the broader de-risking narrative regarding institutional investors' risk appetite.

Patel said institutional traders are buying select artificial intelligence names amid the volatility. He specifically pointed to Meta Platforms as the top pick last week. The Facebook parent company's stock surged nearly 13% in the week following the debut of its Muse Charm device. Momentum in the stock has been building since Meta launched its Muse personal AI agent earlier this month.

"Macro uncertainty has not stopped risk-taking," Patel said. Instead, "it has made investors more selective."

Retail Loses Volume Share

Retail traders performed well in 2025, prompting some to declare they had shed the "dumb money" label. Their performance was partly credited to the decision to buy the dip during the market decline after Trump introduced tariffs.

But Goldman Sachs says retail investors' share of S&P 500 trading volume has been trending downward from a peak nearly a year ago. The firm found that the ratio is currently more than three percentage points below the five-year average.

Despite pressure from rising Treasury yields, the S&P 500 still closed up more than 1% last week. The rally pushed the benchmark index into positive territory for the month.