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How a decline in some Google searches shows retail investors are leaving the market

In this photo illustration the stock trading graph of Tesla, Inc. seen on a smartphone screen.

Rafael Henrique | Lightrocket | Getty Images

With the stock market well on its way to its worst year since the financial crisis, mom-and-pop investors appear to be losing interest.

Judging by online search trends, the curiosity over stock prices has returned back to its pre-pandemic levels, in February 2020 when the market was near the end of its longest bull run ever. Market-related searches peaked in mid-March 2020, when the Covid-19 pandemic and associated economic shutdowns sent investors into panic selling. It stayed comparatively high through the end of 2021.

However, in recent days, searches for terms related to the Dow Jones Industrial Average, Apple and Tesla have moved back to the norm.

Those terms are reliable proxies for retail investor interest and can thus help gauge who is really moving the market, said Nicholas Colas, co-founder of DataTrek Research.

“Americans are paying less attention to the stock market’s latest round of volatility than the June lows and are less interested in high-quality US tech stocks than at the end of 2019,” Colas wrote in the firm’s daily market note issued Wednesday evening.

Colas added that sharp declines in prices, like what has happened through 2022, usually attract widespread attention. Worries over the market generally dampen consumer spending, which could help bring prices down at a time when inflation is running near 40-year highs.

“That transmission mechanism only works if consumers are paying attention to stock prices, however,” he said.

On the issue of tech stocks, the waning interest in bellwether companies like Apple and Tesla “simply says that retail investors are not as engaged as they were a year or two ago. That we already knew, and it will take markets stabilizing and starting to rally again before they return.”

Colas used the Dow as a proxy because it is much more of a Main Street indicator than the S&P 500, which is followed more closely by traders. The Dow is composed of just 30 stocks, but it is tracked more closely by retail investors as it is comprised of some of the biggest U.S. companies.

The waning interest in stock market bellwethers reflects declining retail volumes at popular online trading platforms including Robinhood, which has been slashing headcount as activity has slowed.

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